Publicly traded company in the United States are required to disclose its 10-Q reports (quarterly reports) within 45 days after the end of each quarter. Additionally, large company must disclose its 10-K reports (annual reports) within 60 days after the fiscal year-end and typically hold a shareholders’ meeting within 120 days.
Most Japanese subsidiaries required to get audited are generally instructed by a publicly traded parent company in the US.
However, the audit conducted in Japan is not statutory, if the subsidiary does not falls under the definition of “a large company (a company with capital of 500 million yen or more, or liabilities of 20 billion yen or more)” according to the Companies Act in Japan.
Subsidiaries not required for statutory audit usually prepare financial results in accordance with U.S accounting standards (US-GAAP). These companies are often relatively small and middle-sized and follow the instructions of the Group auditors from the U.S. headquarters.
The audit of subsidiaries also tends to become a significant burden. Normally, it is required to complete the audit within one to two weeks after the fiscal year-end. Furthermore, a relatively significant subsidiary may be required to undergo review procedures even on a quarterly basis.
In the past, it was common for the same group firm as the auditor of a parent company to conduct the subsidiary’s audit. However, such audits do not necessarily need to be conducted by Big4 firms as long as the auditors are well-versed in U.S. accounting standards.
Our firm has staff members of USCPA who are proficient in US-GAAP. Given that Big4 firms are increasingly facing resource constraints to handle audits of small and middle sized companies, we have received a lot of inquiries from US capital companies.
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Our Advantageous Points
・We have staff members of USCPA with experience in auditing a Japanese subsidiary under instruction of Big4 audit firms.
・We offer flexible advice on difference between accounting standards, US-GAAP and J-GAAP.
・If required, we also respond to requests for reporting and explanations in English.
・The level of service provided is comparable to that offered by major audit firms.
・Due to a small number of staff members, the workload is minimized, resulting in reasonable audit fees.