A large number of foreign-affiliated companies operate in Japan, and many of them are not subject to audits or reviews by external third parties. However, in small to mid-sized foreign-owned companies, it is not uncommon for fraudulent activities to occur due to insufficient monitoring systems.
Fraudulent activities can be prevented through audits or reviews conducted by independent third parties. For example, audit procedures in which external auditors send confirmation letters to financial institutions or customers to verify balances as of the closing date can serve as a deterrent against fraudulent acts such as embezzlement and help prevent inappropriate relationships with business partners.
In general, foreign-affiliated companies are not required to engage large audit firms for voluntary audits unless a statutory audit is required. In many cases, it may be more practical to engage individual CPAs when a voluntary audit is conducted for investigative purposes.
We provide audit and investigation services to address indications of fraud in foreign-owned companies, while taking into account the intentions of the parent company. We can perform audit procedures as part of agreed-upon procedures or conduct internal audit work under the direction of the parent company.
Our Advantageous Points
If unlisted entity asks voluntary audit although it is not statutorily required, the following matters should be taken into consideration.
- Whether auditors can give detailed advice to the client in terms of establishment of internal control
- Whether auditors can make a proposal about countermeasures to avoid frauds other than audit service Can you respond to detailed advice on internal control construction?
- The validity of audit fee level (whether it is inappropriately expensive)
We will give the best proposal after grasping the client’s needs and requests. If you consider voluntary audit service to prevent employee fraud and enhance transparency of internal control, please contact us.
Examples of the company encouraged to reach out
- The company which does not currently take an external audit, however, requested by the parent company overseas to be verified by the third party in order to enhance the reliability of financial statements, and we would like them to be verified by a third party.
- The company considering the establishment of a management system through external verification to prevent fraud in advance.
- The company which would like to take an external audit, however, hesitant to ask Big audit firm because of an expensive audit fee.
- The company considering external audit by professionals since it is effective to introduce audit system by CPAs for the purpose to restrain fraud or illegal actions beforehand.