Japan Big Four, Audit Rivals Bracing for Changes Amid New Rules

Changes to Japan’s audit rules are forcing changes across the market, as the Big Four accounting firms part with less lucrative clients and smaller firms face pressure to consolidate.

New audit rules from the International Auditing and Assurance Standards Board are being incorporated into local standards by the Japanese Institute of Certified Public Accountants (JICPA). Among the most consequential: Since April 2020, the firms must report on Key Audit Matters, highlighting the most important issues discovered in the audit.

Yoshinao Matsumoto, who served on a Financial Services Agency KAMs advisory group, said the new requirements have increased the ...