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Audit Effect

The impacts of audit activities are not confined to the 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. The improper amounts represent the ones found in the accounts actually audited. The auditees take remedial actions not only to the 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 effect will be expected because other 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 makes instructions/advice to the 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

The Board’s audit results produce the effect to prevent recurrence of similar cases for the future after the auditees take appropriate actions. 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 the auditees’ operations.

(4) Deterrent effect

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

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(c)2011 Board of Audit of Japan