Auditors in Japan: A Developing Profession

• In Event: Emerging Research/Dialogue

Abstract

Recent disclosures of auditing scandals in Japan reveal that billion dollar investment losses were hidden from the auditors and regulators for decades. The size of these hidden losses and the lengthy period of time during which they remained undiscovered raised a familiar lament “Where were the auditors?” The answer may lie in an ongoing and unresolved conflict that exists between Japanese culture and the demands placed on auditors and auditing firms. Auditors are expected to be independent and to search for and report financial statement problems that they discover. Yet cultural characteristics related to group orientation, risk aversion, and role status create discord within auditors attempting to conduct audits and fulfill their professional obligations. Utilizing data from 1985 and 2002, we examine changes in work-related national value measures for a sample of Japanese auditors. The changes identified offer insights into the continued existence of societal barriers to effective auditing in Japan.

Authors

• Jeanne H Yamamura, University of Nevada-Reno

• Michimasa Satoh, Aichi Gakuin University