J-SOX
Encyclopedia
The , promulgated on June 14th, 2006, is the main statute
codifying securities law and regulating securities companies in Japan.
The law provides for:
s such as the Kanebo, Livedoor
, and Murakami Fund episodes.
The Internal Control Committee of the Business Accounting Council of the Japanese Financial Services Agency provided final Implementation Guidance for Management Assessment and Audit of Internal Controls over Financial Reporting (ICFR) in February 2007. The Implementation Guidance provides details to Japanese companies on how to implement a Management Assessment of Internal Control over Financial Reporting as required under the Financial Instruments and Exchange Law.
The Financial Instruments and Exchange Law became effective in April 2008 for roughly 3,800 companies listed in Japan, along with their foreign subsidiaries.
Forrester Research lists the following challenges and differences between J-SOX and SOX:
Statute
A statute is a formal written enactment of a legislative authority that governs a state, city, or county. Typically, statutes command or prohibit something, or declare policy. The word is often used to distinguish law made by legislative bodies from case law, decided by courts, and regulations...
codifying securities law and regulating securities companies in Japan.
The law provides for:
- Registration and regulation of broker dealers and their registered representativeRegistered RepresentativeA Registered Representative, also called a General Securities Representative, a Stock Broker, or an Account Executive, is an individual who is licensed to sell securities and has the legal power of an agent....
s - Disclosure obligations applicable to public companies, investment trustInvestment trustAn Investment trust is a form of collective investment found mostly in the United Kingdom. Investment trusts are closed-end funds and are constituted as public limited companies....
s and similar entities - Tender offerTender offerTender offer is a corporate finance term denoting a type of takeover bid. The tender offer is a public, open offer or invitation by a prospective acquirer to all stockholders of a publicly traded corporation to tender their stock for sale at a specified price during a specified time, subject to...
rules - Disclosure obligations applicable to large shareholders in public companies
- Internal controlInternal controlIn accounting and auditing, internal control is defined as a process effected by an organization's structure, work and authority flows, people and management information systems, designed to help the organization accomplish specific goals or objectives. It is a means by which an organization's...
s in public companies; in this role the law is often referred to as J-SOX, a reference to the American Sarbanes-Oxley ActSarbanes-Oxley ActThe Sarbanes–Oxley Act of 2002 , also known as the 'Public Company Accounting Reform and Investor Protection Act' and 'Corporate and Auditing Accountability and Responsibility Act' and commonly called Sarbanes–Oxley, Sarbox or SOX, is a United States federal law enacted on July 30, 2002, which...
(SOX).
J-SOX provisions
The internal control portions of the FIEL were largely enacted in response to corporate scandalCorporate scandal
A corporate scandal is a scandal involving allegations of unethical behavior by people acting within or on behalf of a corporation. A corporate scandal sometimes involves accounting fraud of some sort...
s such as the Kanebo, Livedoor
Livedoor
is an Internet service provider based in Tokyo, Japan, that runs a web portal and numerous other businesses. The company was founded and led in its first 10 years by Takafumi Horie, known as "Horiemon" in Japan...
, and Murakami Fund episodes.
The Internal Control Committee of the Business Accounting Council of the Japanese Financial Services Agency provided final Implementation Guidance for Management Assessment and Audit of Internal Controls over Financial Reporting (ICFR) in February 2007. The Implementation Guidance provides details to Japanese companies on how to implement a Management Assessment of Internal Control over Financial Reporting as required under the Financial Instruments and Exchange Law.
The Financial Instruments and Exchange Law became effective in April 2008 for roughly 3,800 companies listed in Japan, along with their foreign subsidiaries.
Forrester Research lists the following challenges and differences between J-SOX and SOX:
- Professional services. Japan has fewer than 10% of the number of qualified accountants than the US.
- Independence of auditors. While the concept of auditor independence exists in the Japanese market similar to the US, many Japanese firms can and will rely on the influence and recommendations of their audit firms.
- Audit automation is critical. With the extreme shortage of auditors compared to US per capita numbers, this shortage will increase the requirement and necessity for process efficiency in the internal audit process and software that can support these processes.
- Support of IT governance. In the November guidance regarding the scope of the J-SOX process, it is clear that IT controls are a central point of focus for J-SOX
See also
- Policy 52-109 – Canadian version of Sarbanes-Oxley Act
- Bill 198Bill 198In Canada, Bill 198 is an Ontario legislative bill effective April 7, 2003, which provides for regulation of securities issued in the province of Ontario. The legislation encompasses many areas. It is perhaps best known for clauses that provide equivalent legislation to the U.S. Sarbanes-Oxley Act...
– specifically for Ontario - CLERP-9Corporate Law Economic Reform Program Act 2004Corporate Law Economic Reform Program Act 2004, commonly called CLERP 9, is the most recent reform to the Corporations Act 2001 which governs corporate law in Australia...
– Australian version of the act - Data Loss Prevention