In most cases, JPN subsidiaries under the US capital are requested to get audited when the parent company is a listed company. However, if the subsidiary falls under “the large company (a company with capital exceeding 500 million yen or liabilities exceeding 20 billion yen)”, its audit is statutory under Japanese Companies Act. Even a subsidiary with 100% US capital is also required to close financial results in accordance with Japanese accounting standards (J-GAAP) and get audited by Japanese auditors apart from the Group audit.

Manufacturers with factories in Japan and financial institutions operating business with large funds tend to have large amounts of capital and liabilities. Therefore, they are treated as “the large company” under the Companies Act, and are required to get audited in Japan in addition to the US GAAP audit.

The statutory audit required by the Companies Act were once generally conducted by the same group firm as the auditor of a parent company. However, audits required by the Japanese Companies Act do not necessarily have to be conducted by Big4 firms. In fact, in Japan, there are many cases where unlisted infrastructure companies or owner-managed companies with long history, which tend to have large amounts of assets and capital, entrust their audit to a mid-sized accounting firm.

However, for the audit required by the JPN Companies Act, in principle, a statutory auditor must be appointed at an annual general meeting of shareholders held within 3 months of the fiscal year end (Since in most cases the US parent company holds 100% of the shares, it would be a superficial meeting). Even after the annual general meeting is held, if the parent company agrees, it is possible to hold an extraordinary general meeting and re-appoint the statutory auditor. But, it is necessary to obtain the parent company’s consent before proceeding with the appointment.

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Our Advantageous Points

・A certified public accountant with experience in auditing a Japanese subsidiary in accordance with the Companies Act in Japan. 
・We offer flexible advice on accounting standards regarding difference between 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 and efficient team, the workload is minimized, resulting in reasonable audit fees.

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