An industry body governing certified public accountants said Thursday it will start a registration system next April to help it weed out accounting firms or auditors found to have violated accounting rules.
The Japanese Institute of Certified Public Accountants will compile a list of registered auditing firms to help it publicly identify those found that have breached accounting regulations or failed to maintain high auditing standards, JICPA President Tsuguoki Fujinuma said.
The disciplinary action will help ensure that problematic auditing firms are effectively barred from auditing and certifying the earnings reports of listed companies.
The institute will ask accounting firms — especially the nation’s 250 top major auditors — to register as members of what it is tentatively calling “the club of auditing offices for listed companies.”
“What counts under the system is how society will perceive auditing companies that have not registered as club members,” Fujinuma said at a news conference.
“We believe that the society’s common sense will work” to prevent unregistered auditors from engaging in accounting work.
He suggested that registration will effectively serve as a qualification for any auditor wishing to screen listed companies’ financial reports.