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Audit Effect

The impact of audit activities is not confined to improper amounts referred in the annual Audit Report.

(1) Audit results on a part of all accounting

The Board does not audit all accounts of the auditees. Improper amounts represent those found in accounts actually audited. Auditees take remedial action not only for cases reported but also to similar cases not actually referred to in the Audit Report. In addition, by providing other auditees with information on the reported findings, more effects will be expected as auditees with similar operations rectify and improve their improper cases.

(2) Rectification and improvement by instruction/advice made in the course of the audit

The Board gives instructions/advice to auditees in the course of the audit to rectify and improve inappropriate cases which are not serious enough to be referred to in the Audit Report.

(3) Ripple effect in the future

Board audit results produce an effect of preventing recurrence of similar cases for the future after auditees take appropriate action. Among several types of audit results, Presentation of Opinions and/or Demand for Measures, and Measures Taken have more such effects because they eliminate common causes of similar cases in auditee operations.

(4) Deterrent effect

The deterrent effect against illegal and improper auditee accounting can be expected because auditees are required to submit statements of accounts and documentary evidence for the Board’s in-office documentary audit on a monthly basis, as well as to be subjected to the field audit once a year or in several years.

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(c)2011 Board of Audit of Japan