As a result of the adoption of the new auditing standards in January 2002, Japan's Generally Accepted Auditing Standards (GAAS) became, according to a 2004 Financial Services Agency (FSA) presentation, consistent with the International Standards on Auditing (ISAs) of the International Auditing and Assurance Standards Board (IAASB) existing at that time. Nevertheless, as stated in a 2006 comparison of Japanese GAAS and ISAs prepared by the Japanese Institute of Certified Public Accountants (JICPA), while some new and revised IAASB pronouncements are under consideration by the JICPA, other ISAs have neither been incorporated into national standards nor included in the work program of the JICPA. Per the JICPA's 2004 self-assessment, Japanese GAAS are comprised of the auditing standards issued by the Business Accounting Council (BAC) of the FSA and the implementation guidelines issued by the JICPA. Both the JICPA and the BAC are accountable to the Japanese Government.

General Overview

According to the Financial System Stability Assessment conducted by the International Monetary Fund in 2003, important modifications had been made to the Japanese auditing standards during the previous five years; however, further measures to implement the standards were needed. According to a 2004 Financial Services Agency (FSA) presentation, as a result of the adoption of new auditing standards in January 2002, Japanese Generally Accepted Auditing Standards (GAAS) became consistent with the International Standards on Auditing (ISAs) of the International Auditing and Assurance Standards Board (IAASB) existing at that time. According to the Japanese FSA, it is the aim of the Business Accounting Council (BAC) and the Japanese Institute of Certified Public Accountants (JICPA), the two auditing standards setting bodies in Japan, to continue improvement of Japanese GAAS with the aim of international convergence. However, as stated in a 2006 comparison of Japanese GAAS and ISAs prepared by the JICPA, while some new and revised IAASB pronouncements are under consideration by the JICPA, other ISAs have neither been incorporated into national standards nor included in the work program of the JICPA.

The JICPA's 2004 self-assessment indicates that the JICPA is a founding council member of the International Federation of Accountants (IFAC) and a member of the IAASB. The JICPA is also a founding member of the International Accounting Standards Board (IASB) and the founding and key executive member of the Confederation of Asian and Pacific Accountants. The JICPA Ethics Committee, according to the JICPA website, was established in July 2004 with the objective to strengthen the independence of auditors, as required by the CPA Act. The Ethics Committee has a full-time staff and comprises JICPA members as well as individuals outside of the auditing and accounting professions.

The JICPA Code of Ethics was revised twice, in 2000, and a second time in 2003 and 2004. The JICPA, according to its 2004 self-assessment, participates in the IAASB's standard setting process and the body's task forces and other activities. The IAASB and the IFAC regularly communicate work programs to key stakeholders including Japan's regulators for banking and insurance. The JICPA meets often with stakeholders to convey current activities of the IAASB.

Per JICPA's 2004 self-assessment, Japanese GAAS are comprised of the auditing standards issued by the BAC of the FSA and the implementation guidelines issued by the JICPA. Both the BAC and the JICPA are accountable to the Japanese Government. All entities, in general, according to the same self-assessment, are required to be audited by internal auditors. Listed companies have to be audited by external auditors pursuant to the Financial Instruments and Exchange Law, which superseded the Securities Exchange Law in June 2006. In addition, under the Commercial Code, large companies are required to be audited by both internal auditors and independent CPAs or audit corporations if (a) their capital stock is 500 million yen or more; or (b) their total liabilities exceed 20 billion yen. There is no difference between auditing standards applied for audits of banks, insurance companies, and non-bank financial institutions and those of other industries, according to the JICPA's 2004 self-assessment.

The Principles

ISA 200 Objective and General Principles Governing an Audit of Financial Statements (effective 2006)

NC

According to a 2006 comparison of Japanese GAAS and ISAs published by the JICPA, the comparable national standard is Auditing Standards Committee Statement (ASCS) No. 24, which is effective for audits of financial statements for periods ending on or after March 1, 2003, and "Auditing Standards" issued by the BAC, which is effective for audits of financial statements for periods ending on or after March 31, 2007. The amendments made to ISA 200 as a result of the revisions made to ISA 700 were not taken into account in the corresponding national standards nor were they included in the JICPA's work program.

ISA 210 Terms of Audit Engagements (effective 2006)

NC

According to a 2006 comparison of Japanese GAAS and ISAs published by the JICPA, the requirements of ISA 210 are contained in the Law and Regulation Committee Research Report No. 3 released July 22, 2003 and revised on March 10, 2005. Some of the requirements of ISA 210 are omitted in the national standards. The amendments made to ISA 210 as a result of the revisions made to ISA 700 were not taken into account in the corresponding national standards nor were they included in the JICPA's work program.

ISA 220R Quality Control for Audits of Historical Financial Information (effective 2005)

II

According to a 2006 comparison of Japanese GAAS and ISAs published by the JICPA, the comparable national standards are ASCS No. 32, which is effective for audits of financial statements for periods commencing on or after March 26, 2008 and Standards on Quality Control for Audits issued by the BAC, which are effective for audits of financial statements for periods ending on or after March 31, 2007. However, there is insufficient publicly available information as to compliance of this pronouncements with ISA 220.

ISA 230R Documentation (effective 2006)

II

According to a 2006 comparison of Japanese GAAS and ISAs published by the JICPA, the comparable national standard is ASCS No. 36, effective for audits of financial statements for periods ending on or after March 16, 2007. ASCS No. 36 superseded ASCS No. 16. , There is insufficient publicly available information as to compliance of ASCS No. 36 with ISA 230

ISA 240 The Auditor’s Responsibility to Consider Fraud in an Audit of Financial Statements (effective 2004)

ID

According to a 2006 comparison of Japanese GAAS and ISAs published by the JICPA, at the time of the assessment the Exposure Draft Auditor's Responses to Fraud in an Audit of Financial Statements was outstanding. There is no difference between this Exposure Draft and ISA 240.

ISA 250 Consideration of Laws and Regulations in an Audit of Financial Statements (effective 2004)

II

There is insufficient public information as to Japan's compliance with this principle. However, according to a 2006 comparison of Japanese GAAS and ISAs published by the JICPA, the comparable national standard is ASCS No. 11 which is effective for audits of financial statements for periods ending on or after March 1, 2004.

ISA 260 Communications of Audit Matters With Those Charged With Governance (effective 2004)

II

There is insufficient public information as to Japan's compliance with this principle. However, according to a 2006 comparison of Japanese GAAS and ISAs published by the JICPA, the comparable national standard is ASCS No. 25 which is effective for audits of financial statements for periods ending on or after March 1, 2004.

ISA 300 Planning an Audit of Financial Statements (effective 2004)

II

There is insufficient public information as to Japan's compliance with this principle. However, according to a 2006 comparison of Japanese GAAS and ISAs published by the JICPA, the comparable national standard is ASCS No. 27 which is effective for audits of financial statements for periods commencing on or after March 30, 2006.

ISA 315 Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement (effective 2004)

II

There is insufficient public information as to Japan's compliance with this principle. However, according to a 2006 comparison of Japanese GAAS and ISAs published by the JICPA, the comparable national standard is ASCS No.29 effective for audits of financial statements for periods commencing on or after March 30, 2006.

ISA 320 Audit Materiality (effective 2004)

II

There is insufficient public information as to Japan's compliance with this principle. However, according to a 2006 comparison of Japanese GAAS and ISAs published by the JICPA, the comparable national standard is ASCS No.5 effective for audits of financial statements for periods commencing on or after March 31, 2005.

ISA 330 The Auditor’s Procedures in Response to Assessed Risks (effective 2006)

II

There is insufficient public information as to Japan's compliance with this principle. However, according to a 2006 comparison of Japanese GAAS and ISAs published by the JICPA, the comparable national standard is ASCS No.30 effective for audits of financial statements for periods commencing on or after March 16, 2007.

ISA 402 Audit Considerations Relating to Entities Using Service Organizations (effective 2004)

II

There is insufficient public information as to Japan's compliance with this principle. However, according to a 2006 comparison of Japanese GAAS and ISAs published by the JICPA, the comparable national standard is ASCS No.18 effective for audits of financial statements for periods ending on or after March 17, 2004.

ISA 500 Audit Evidence (effective 2004)

II

There is insufficient public information as to Japan's compliance with this principle. However, according to a 2006 comparison of Japanese GAAS and ISAs published by the JICPA, the comparable national standard is ASCS No.31 effective for audits of financial statements for periods commencing on or after March 30, 2006.

ISA 501 Audit Evidence - Additional Considerations for Specific Items (effective 2004)

NC

According to a 2006 comparison of Japanese GAAS and ISAs published by the JICPA, the comparable national standards are Audit Committee Statement (ACS) No. 8 issued in 1965, ACS No. 53 effective for audits of financial statements for periods commencing on or after April 1, 1993, and ACS No. 73 which is effective for audits of financial statements for periods commencing on or after April 1, 2002. As stated in the comparison, some requirements of ISA 501 are omitted in the national pronouncements.

ISA 505 External Confirmations (effective 2004)

II

There is insufficient public information as to Japan's compliance with this principle. However, according to a 2006 comparison of Japanese GAAS and ISAs published by the JICPA, the comparable national standard is ASCS No.19 effective for audits of financial statements for periods ending on or after March 1, 2003.

ISA 510 Initial Engagements — Opening Balances (effective 2004)

II

There is insufficient public information as to Japan's compliance with this principle. However, according to a 2006 comparison of Japanese GAAS and ISAs published by the JICPA, the comparable national standard is AC No.75 which is effective for audits of financial statements for periods ending on or after March 31, 2005.

ISA 520 Analytical Procedures (effective 2004)

II

There is insufficient public information as to Japan's compliance with this principle. However, according to a 2006 comparison of Japanese GAAS and ISAs published by the JICPA, the comparable national standard is ASCS No. 1 effective for audits of financial statements for periods ending on or after March 1, 2003.

ISA 530 Audit Sampling and Other Selective Testing Procedures (effective 2004)

II

There is insufficient public information as to Japan's compliance with this principle. However, according to a 2006 comparison of Japanese GAAS and ISAs published by the JICPA, the comparable national standard is ASCS No. 9 and is effective for audits of financial statements for periods ending on or after March 1, 2003.

ISA 540 Audit of Accounting Estimates (effective 2004)

II

There is insufficient public information as to Japan's compliance with this principle. However, according to a 2006 comparison of Japanese GAAS and ISAs published by the JICPA, the comparable national standard is ASCS No.13 and is effective for audits of financial statements for periods ending on or after March 1, 2003.

ISA 545 Auditing Fair Value Measurements and Disclosures (effective 2004)

NC

According to a 2006 comparison of Japanese GAAS and ISAs published by the JICPA, there are no auditing standards or guidelines addressing audits on fair value measurement and disclosure in Japan.

ISA 550 Related Parties (effective 2004)

II

There is insufficient public information as to Japan's compliance with this principle. However, according to a 2006 comparison of Japanese GAAS and ISAs published by the JICPA, the comparable national standard is ASCS No. 34 effective for audits of financial statements for periods commencing on or after March 30, 2006.

ISA 560 Subsequent Events (effective 2006)

NC

According to a 2006 comparison of Japanese GAAS and ISAs published by the JICPA, the comparable national standard is AC No.76 which is effective for audits of financial statements for periods ending on or after March 1, 2003. The conforming amendments made to ISA 560 as a result of the revisions made to ISA 700 were not taken into account in the corresponding national standards nor were they included in the JICPA's work program.

ISA 570 Going Concern (effective 2004)

II

There is insufficient public information as to Japan's compliance with this principle. However, according to a 2006 comparison of Japanese GAAS and ISAs published by the JICPA, the comparable national standard is ASCS No. 22 effective for audits of financial statements for periods ending on or after March 1, 2004.

ISA 580 Management Representations (effective 2004)

II

There is insufficient public information as to Japan's compliance with this principle. However, according to a 2006 comparison of Japanese GAAS and ISAs published by the JICPA, the comparable national standard is ASCS No. 3 which is effective for audits of financial statements for periods ending on or after March 17, 2004.

ISA 600 Using the Work of Another Auditor (effective)

II

There is insufficient public information as to Japan's compliance with this principle. However, according to a 2006 comparison of Japanese GAAS and ISAs published by the JICPA, the comparable national standard is ASCS No. 8 which is effective for audits of financial statements for periods commencing on or after January 28, 2002.

ISA 610 Considering the Work of Internal Auditing (effective 2004)

II

There is insufficient public information as to Japan's compliance with this principle. However, according to a 2006 comparison of Japanese GAAS and ISAs published by the JICPA, the comparable national standard is ASCS No. 15 which is effective for audits of financial statements for periods ending on or after March 1, 2003.

ISA 620 Using the Work of an Expert (effective 2005)

II

There is insufficient public information as to Japan's compliance with this principle. However, according to a 2006 comparison of Japanese GAAS and ISAs published by the JICPA, the comparable national standard is ASCS No. 14 which is effective for audits of financial statements for periods ending on or after November 18, 2002.

ISA 700 The Auditor’s Report on Financial Statements (effective 2006)

ID

According to a 2006 comparison of Japanese GAAS and ISAs published by the JICPA, the comparable national standard is ASCS No. 24 which is effective for audits of financial statements for periods ending on or after March 1, 2003. As of July 2006, the JICPA was working to issue an Exposure Draft which reflects the content of ISA 700.

ISA 701 Modifications to the Independent Auditor's Report (effective 2006)

II

There is insufficient public information as to Japan's compliance with this principle.

ISA 710 Comparatives (effective 2004)

NC

According to a 2006 comparison of Japanese GAAS and ISAs published by the JICPA, the concept of comparative financial statements is not adopted in the national financial reporting framework.

ISA 720 Other Information in Documents Containing Audited Financial Statements (effective 2004)

II

There is insufficient public information as to Japan's compliance with this principle. However, according to a 2006 comparison of Japanese GAAS and ISAs published by the JICPA, the comparable national standards are ACS No. 75, which is effective for audits of financial statements for periods ending on or after March 31, 2005, and Auditing Standards issued by the BAC, which are effective for audits of financial statements for periods ending on or after March 31, 2007.

ISA 800 The Auditor’s Report on Special Purpose Audit Engagements (effective 2006)

NC

According to a 2006 comparison of Japanese GAAS and ISAs published by the JICPA, there are no comprehensive standards or guidelines with respect to ISA 800, however there are specific guidelines which address the auditor's report on each particular engagement. The conforming amendments made to ISA 800 as a result of the revisions made to ISA 700 were not taken into account in the corresponding national standards nor were they included in the JICPA's work program.