The Japan Financial Services Agency has published minutes of the Corporate Accounting Council Audit Subcommittee that set out the proposed Japanese response to recent International Auditing and Assurance Standards Board revisions on going concern and fraud. On going concern, the secretariat proposed revising Japan's auditing standards to change the minimum assessment period from at least one year from the fiscal year-end date to at least one year from the approval date of the financial statements, and to expand audit report disclosure so that auditors explain their assessment of management's going concern evaluation even when no significant uncertainty is identified. On fraud, the secretariat's view was that amendments to Japan's auditing standards or Fraud Risk Response Standards are not needed because existing domestic requirements already call for enhanced procedures when fraud or suspected fraud is identified. Instead, the Japan Institute of Certified Public Accountants would be asked to update practical guidance, including clearer presentation of fraud-related key audit matters in audit reports. The Accounting Standards Board of Japan said it is separately developing accounting standards on going concern covering evaluation and disclosure and will consider consistency with any audit standard changes. Members also highlighted the need to define the approval date clearly, align terminology across audit, accounting and disclosure frameworks, and limit implementation burden. The chairman said the next Audit Subcommittee meeting will be asked to review a draft revision of the auditing standards. The secretariat also indicated that application related to the revised ISA 240 is expected from the fiscal year starting in April 2027, subject to further consideration with stakeholders.
Japan Financial Services Agency2026-05-22
Japan Financial Services Agency outlines proposed going concern audit revisions and keeps fraud changes to guidance
The Japan Financial Services Agency’s Corporate Accounting Council Audit Subcommittee discussed revising Japan’s auditing standards in response to International Auditing and Assurance Standards Board changes on going concern and fraud. The secretariat proposed extending the going concern assessment period to at least one year from the financial statement approval date and expanding audit report disclosures, while keeping existing fraud standards but requesting updated practical guidance from the Japan Institute of Certified Public Accountants. Revised ISA 240-related application is expected from fiscal years starting in April 2027, subject to further stakeholder consideration.