Press Conference by the Minister for Financial Services

(Excerpt)

August 2 , 2005

Q.

In the Kanebo accounting fraud scandal, the auditing firm ultimately overlooked the window-dressing of accounts. In the eyes of the supervisory agency, what is the auditing firm's responsibility? Further, there were some news reports this morning that the Financial Services Agency (FSA) was considering a policy to oblige auditing firms to report to the Securities and Exchange Surveillance Commission (SESC) if any irregularities that lead to accounting fraud are discovered in the process of accounting audits. What is your position on this?

A.

As the first question relates to an individual case, I will refrain from commenting on it. In any case, the FSA will keep a close eye on how the situation unfolds and take proper action if necessary in accordance with laws and ordinances.

As for the second question, I am aware of such news articles but the truth is that we have not laid down such a policy as referred to in those articles. It is a matter that should be examined in light of how the role of accounting audits should be regarded. Generally speaking, proper disclosure is extremely important, so it will be necessary to continue looking into how it can be ensured from a broad perspective in the future.