Regulations
In the United States, audits are not legally required for private (non-listed) companies.
However, in some cases, audits are requested for Japanese subsidiaries due to the parent company being listed in the U.S. or for similar reasons.
Public companies in the U.S. are required to file Form 10-Q within 45 days of the quarter-end and Form 10-K within 60 days of the fiscal year-end with the SEC (U.S. Securities and Exchange Commission). Accordingly, Japanese subsidiaries must also prepare financial reports promptly, based on U.S. GAAP.
The audit of subsidiaries tends to be a significant burden. Generally, it is required to complete the audit within one to two weeks after the fiscal year-end. For larger Japanese subsidiaries, quarterly review procedures may also be required.
In the past, it was common for the same group firm as the parent company’s auditor to also audit the subsidiary. However, in recent years, major audit firms have increasingly lacked the resources to handle audits of smaller entities. As a result, more companies are turning to firms like ours for support.
Our firm focuses on audits of relatively small-scale subsidiaries. In many cases, no special procedures are required during quarterly reporting. Most audit procedures are conducted at the fiscal year-end, in accordance with instructions from the parent company’s auditor. Additionally, our services are provided by professionals holding U.S. CPA qualifications, so we are fully capable of conducting audits based on U.S. GAAP.
Such audits do not necessarily have to be conducted by large audit firms. With our in-house CPAs well-versed in U.S. GAAP, we can provide efficient and reliable audit services at a reasonable cost.