The latest auditing methods help our clients keep abreast of change.

Financial Statement Audit and Audit Concerning Internal Controls over Financial Reporting

KPMG AZSA LLC manages its audit operations under a robust uniform quality control system centered on area offices in three regions of the country.

We believe an audit needs to be rigorous in order to fulfill its social and market function, yet at the same time should be efficient and beneficial to the client’s business. Our audits utilize the KPMG Audit Manual (KAM), continually developed on the basis of KPMG’s global experience and technical knowhow. KAM is applied consistently by audit teams at KPMG member firms world-wide to perform audits in compliance with the International Standards on Auditing. For regulations specific to Japan, KPMG AZSA LLC further supplements the KAM with various locally applicable regulations and professional standards.

The following chart shows selected key activities performed in a KPMG audit:

Maintaining high quality standards

KPMG AZSA LLC has an extensive cadre of full-time professionals assigned to communicate new developments in domestic and international accounting, auditing, and regulations. Our sophisticated information infrastructure helps ensure timely communication of new developments and enables sharing of experience so that our audit engagement teams can deliver audits that are responsive to regulatory changes. KPMG AZSA LLC has established review committees independent of its audit teams to help ensure the high standards we demand in the quality, integrity and reliability of our audits and audit opinions.

These review committees monitor the progress of audits and oversee the management of significant risks and the resolution of significant issues that may arise.

KPMG AZSA LLC has formed a group to focus on the particular needs of Japanese clients who are registered with the U.S. Securities and Exchange Commission so that the appropriate resources are allocated to meet the unique needs of these clients in dealing with the complexities of U.S. GAAP, the disclosure and reporting requirements of the U.S. SEC as well as the Sarbanes-Oxley Act of 2002.

Additionally, a professional team specializing in the requirements of the International Financial Reporting Standards (IFRS) has been established to focus on the emerging needs of clients considering an IFRS conversion or an audit of IFRS financial statements.

SEC Standards-Conforming Audit

With the enactment of the Sarbanes-Oxley Act of 2002, Japanese corporations registered with the US SEC came under obligation to apply more stringent rules to ensure compliance with US accounting standards and assume enhanced responsibility for internal control over financial reporting. These include a self-evaluation of the effectiveness of a company’s internal controls by the corporate management, followed by an independent audit of internal controls and management’s evaluation. KPMG AZSA LLC professionals assigned to applicable engagements must comply with KPMG’s qualifications standards to ensure they have the knowledge and experience of evaluating internal controls under the stringent US SEC regulations.

Audit of Financial Statements in Conformity with the International Financial Reporting Standards

KPMG AZSA LLC has established the IFRS Headquarters staffed with professionals holding appropriate KPMG qualifications and extensive IFRS experience. IFRS Headquarters assigns these professionals to perform audits of financial statements prepared in conformity with IFRS, drawing on an extensive information base available through KPMG’s global network and broad experience of providing services to European clients in Japan. KPMG AZSA LLC also offers IFRS-related advisory services to clients who are scheduled to report under IFRS or are considering conversion to IFRS.