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Effect of Audit Activities

The impact of audit activities is not confined to improper amounts referred in the annual Audit Report but also includes the following:

(1) Financial impact of audit work

The Board conducts a trial calculation of the impact of the rectification/improvement measures taken by auditees within the past year in relation to the financial management reported in previous audit reports which resulted in positive financial impact on the State ministries and agencies of which the scale and degree are measurable in monetary terms, such as the recovery of losses and prevention of excess expenditure, applying certain assumptions and calculation methods. According to the trial calculation for 2018, the total amount of financial impact of rectification/improvement measures, on the basis of each case reported in the Audit Report which resulted in financial impact of one billion yen or more, was 71.2 billion yen.

(2) Non-financial impact of audit work

The rectification/improvement measures by auditees in response to findings reported in the Audit Reports also include some non-financial impacts including, for example, improvement in realizing the effect of programs such as an increase of the utilization rate of facilities and systems not actively used and conducting remedial work for a project whose purpose has not been achieved due to inappropriate design or construction work.

(3) Effects of audit work which are difficult to measure in monetary terms

In some cases, the Board's audit produces some effects on auditees which are difficult to measure in monetary terms, for example, optimized business affairs due to rectification/improvement of accounting, enhanced efficiency and transparency, and an improved organizational structure for the appropriate functioning of internal control.

(4) Ripple effect

Board audit also produces some ripple effects, for example, ministries and agencies that reviewed audit findings for other auditees reported in the Audit Report voluntarily can examine whether they have any similar issues and rectify the problem or prevent the same case from occurring by paying attention to their respective execution of accounting.

(5) Deterrent effect

The deterrent effect against illegal and improper auditee accounting can be expected because being subjected to the Board's audit itself can be a significant deterrent factor.

In addition to the above, 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.

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