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“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.

Web CPA: Sarbanes-Oxley Traveling?

The City has thrown its support behind European Commission proposals to strengthen the regulation of auditing firms that sign-off the accounts of companies listed on European stock markets.

But Britain’s audit watchdog,the Financial Reporting Council, and the big accountancy firms remain concerned over how and when the new rules will be applied.

The directive gives national regulators the power to force the auditors of any company seeking to issue shares in Europe to meet European standards. Those auditors from countries not deemed up to scratch will have to register in Europe and be subject to regular inspections.

A similiar regime in the US, introduced via the Sarbanes-Oxley Act, led to an exodus of foreign companies from US exchanges.

Telegraph.co.uk: EC to adopt pragmatic view on audit directive