“A series of accounting irregularities at large companies have deepened public distrust of both accounting and auditing firms.”

This is the opening sentence of a recent editorial in the Japan Times Online, entitled “Auditing Accountability,” that continues, “It is hoped that a bill to revise the Certified Public Accountant Law, now on the Diet floor, will remind CPAs and auditing corporations of the weight of their social responsibility, and help them regain the public’s trust.”

Under the bill as described in the editorial, the maximum duration in which a chief CPA of a large auditing firm could continue to audit a listed company would be shortened from the current seven years to five years, and CPAs who have quit auditing firms would be prohibited from landing jobs at companies they audited, or their affiliates. Additionally, if companies fail to rectify irregularities that CPAs have detected, the latter would be legally required to report the failure to administrative authorities.

[1] Web CPA: Sarbanes-Oxley Traveling?