FSA Newsletter May 2006

We deliver the hottest information of the times in this section, selected from among questions and answers given at the Minister's press conferences etc. If you wish to find out more, we invite you to visit the "Press Conferences" section of Financial Services Agency's website.

A:		Auditors conduct audits by profession, but in addition to this aspect, they characteristically engage in their duties with a huge social responsibility. This is not limited to Certified Public Accountants and auditing firms in that, for example, lawyers are also in an occupation with huge social responsibilities. In that sense, it is extremely regrettable that a series of scandals involving auditors have arisen. It is necessary to properly examine what to do in response to the scandals and take measures somewhere, including addressing how auditing firms or auditors ought to be, rather than just reprimanding those who were involved in the scandals in various ways. While we have not formally decided where to hold proper discussions, the Financial System Council is already in place, so we will consult with them and take urgent action to properly deal with audits in general for the future.
(from the press conference following a cabinet meeting on Friday, March 31, 2006)

Q:	Yesterday, the Japanese Institute of Certified Public Accountants (JICPA) announced that it would introduce voluntary regulations. JICPA claims that it would be preferable to tackle it by voluntary regulations rather than government regulations. What are your thoughts on this?

A:		Looking into the history of bar associations would be helpful here. There is a law called the Practicing Attorney Law, which sets forth a so-called registration system that does not allow attorneys to practice unless they are registered with the local bar association. Bar associations are extremely autonomous organizations that do not tolerate government intervention, but instead impose self-discipline. Although the registration system of Certified Public Accountants (CPAs) is not as far-reaching in itself as that of the bar associations, I highly appreciate their efforts to steer it based on their own judgment and to reduce misconduct and other such incidents by establishing a code of ethics and other provisions. While it is sad that auditors have to be audited, the CPAs created such a framework of their own accord, so we need to positively observe how it will be steered and managed in the future.
(from the press conference following a cabinet meeting on Friday, April 7, 2006)

A:		Actually, I talked about various matters with Mr. Terada - the head of the Civil Affairs Bureau of the Ministry of Justice - at the end of last week. I suggested that the FSA administration staff and the Ministry of Justice have discussions on how to deal with the Law Concerning the Regulation of Receiving of Capital Subscription, Deposits and Interest on Deposits and the Interest Rate Restriction Law this week, as these Laws are under the shared jurisdiction of the FSA and the Ministry of Justice. He said he would be happy to do so. However, the Law Concerning the Regulation of Receiving of Capital Subscription, Deposits and Interest on Deposits is actually a law under the jurisdiction of the Criminal Affairs Bureau of the Ministry of Justice, so I would like to have talks with the Criminal Affairs Bureau as well. This is because what was intended by the legislation at the time of enactment inevitably appears to have been gradually modified by precedents set by the Supreme Court. If the Supreme Court has presented a certain approach through such precedents, the government, especially the legislature, has the responsibility and obligation to seriously consider how to deal with it.
(from the press conference following a cabinet meeting on Tsuesday, April 18, 2006)