Managerial Auditing Journal 7

Topics: Audit, Auditor's report, Auditing Pages: 4 (937 words) Published: May 19, 2010
1. Research online news services to identify recent developments impacting the accounting and auditing profession in Japan. Briefly summarize these developments in a bullet format. The 5-S auditing. Managerial Auditing Journal

It has been recognized that Japanese firms are clean and orderly. The same is true for high quality western firms. Over the last two decades, the Japanese have formalized the technique and named it 5-S practice. As the name is new to most western societies, the objective of this paper is to explain the intricacy of the 5-S so that it can be understood easily and adopted readily by those who may find the tool useful. Based on the Japanese experience, the author has developed the world's first 5-S audit checklist. Apparently, spearheaded by the ISO 9000 auditing, the 5-S auditing approach has been easily and readily accepted by businesses and industries. As a result of the success, the Hong Kong Government invited the author to commission a 5-S Practice Workbook with ten successful case studies from the manufacturing, services and public sectors. Further, a grant has been given to the author to train up 2,500 5-S lead auditors, the first of its kind in the world. The experience will also be shared in this article. 2. As noted in the case, Japanese companies typically rely more heavily on debt capital than do U.S companies. Explain how this fact may cause the independent audit functions in the two countries to differ.

The leverage that Japan’s mega banks had on that nation’s independent audit function through the late 1990s was manifested by the reluctance of audit firms to issue unfavorable audit opinion on those banks’ annual financial statements. Large banks and financial institutions in the U.S. have some ability to pressure their independent auditors as well. However, that leverage stems principally from the incentive auditors have to retain any large client, not from the fact that large U.S. banks are...
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