Japan’s Financial Services Agency is pressing for greater accountability from audit firms and is to revise its auditing standards. Japan Times reports that the new standards will apply to earnings for the current year ending in March 2020. Auditors will be required to provide clear reasons for any ‘qualified opinions’ given.
The decision to push for greater transparency follows the scandal over Toshiba’s accounts, which dates back to 2016 when PwC Aarata issued a disclaimer opinion. In the wrangle that followed the accounting firm issued a qualified opinion in 2017 but declined to disclose the reason why, claiming it had a duty of confidentiality to the client. Now it would appear that the regulator has decided that auditors’ first accountability is to shareholders and investors rather than to a company.