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Responsibility for
Country
Ethical Standards
Enforcement
Legal Liability
Detection of Fraud
Asia and Pacific (Continued)Japan
The CPA law and the JICPA
Under CPA Law, the Minister
Under the Securities and
The auditor must use due
code prohibit the impairment
of Finance is empowered to
Exchange Act, if investors
care to detect causes of ma-
of trust and require inde-
investigate violations and to
lose because of material
terial difference in financial
pendence, secrecy, and
assess penalties, including
errors in audited financial
statements. The auditor must
restrictions of advertising.
warning, suspension, or with-
statements, the auditor or
report actions that contradict
Punishment may be adminis-
drawal from registration. The
firm must compensate for an
the directors’ duties to the
tered for false and unreason-
CPA has the right to vindicate
error unless they can prove
statutory auditors of the
able attestation.
himself or herself. The JICPA
lack of intention and the use
client.
Punishment Committee also
of due care. Under the
enforces ethical standards.
Commercial Law Code, the
The President of the JICPA
auditor must compensate
determines penalties accord-
client for breach of contract
ing to the views of the com-
and for materiality false items
mittee and the board.
in an audit report if the audi-tor cannot prove due care.
Hong Kong
The Hong Kong Society of
The Hong Kong Society acts
Criminal liability for auditors
The auditor is not expected
Accountants has issued state-
as the disciplinary body.
who willfully make untrue
to search for fraud but must
ments of professional ethics
statements in the prospectus
be aware of the possibility of
originally based on those
or who induce another per-
it and investigate fully if there
issued by the Institute of
son by fraudulent or reckless
are grounds for suspicion.
Chartered Accountants in the
misrepresentation to invest
United Kingdom, but in some
money. The auditor is liable
cases updated based on
for damages to the client and
AICPA’s professional conduct.
in some cases to third partiesfor negligence resulting in fi-nancial loss. Negligence mayalso be treated as a criminaloffense.