The Japanese Institute of CPAs said that the nearly 400 accountants belonging to Japan's four largest auditing firms have worked with the same clients for more than seven years.
The number accounts for about 30 percent of all the four firms' accountants responsible for auditing of client companies, the JICPA told a panel studying corporate accounting.
A revised law governing CPAs, which went into effect in April 2004, bans the practice of auditors working with the same clients for more than seven years. But the years before the law's introduction are not counted. The JICPA has decided that if its member audit firms have worked with the same clients for seven or more years, those firms should replace those accounts by the end of next March.
As of March 31, a total of 392 accountants from KPMG Azsa & Co., Ernst & Young ShinNihon, ChuoAoyama PricewaterhouseCoopers and Tohmatsu & Co. had audited the books of 580 companies for seven years or more, according to the JICPA. The total included 125 accountants who had worked with the same clients for more than 10 years, 65 for more than 15 years, and 24 for more than 20 years.
The panel, organized by the ruling Liberal Democratic Party, is trying to prevent recurrences of accounting scandals, like the recent false financial reports of toiletry and pharmaceutical manufacturer Kanebo Ltd. The company's close ties to auditor ChuoAoyama PwC was blamed for having facilitated the fraud.
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