The Japanese regulatory authority, the Financial Services Agency (FSA) , is planning the introduction of a local equivalent of Sarbanes-Oxley. It would be brought into effect by an amendment to the Securities and Exchange Law in early 2007.
“In Japan, the proposed reporting regulation seems to follow the US example,” says a spokesman for Mizuho Corporate Banking in Tokyo. “We believe FSA is seeking a way to recover financial statements credibility, which was undermined by occasional false reporting.”
The spokesman says the FSA is looking to bolster the internal and external auditing functions through the mandatory introduction of a US-style internal control report to check for unlawful transactions or manipulation of figures. The CEO or CFO of every listed company would be obliged to sign the report and submit it to Ministry of Finance alongside the financial statements.
The Corporate Accounting Council is expected to issue a draft of the new rules nest month.