101 Audit practical use to privately placed investment trusts
Japanese Institute of Certified Public Accountants announced “Proposal from professional auditors and accountants about the loss of pension funds” on May 16 2012.
The following are four proposals that they have suggested.
1. Advantage of independent audit of financial statements of the pension funds
Financial reports with opinions of “inspector” of the pension funds are currently submitted to the Ministry of Health, Labour and Welfare. However, it is not the same as the independent audit. Credibility of the financial disclosure will be achieved by the independent audit.
2. Audit or Confirmation of audit report of the private placement funds
Some of the private placement funds are subject to statutory audit, and others not. Those who are not subject to the statutory audit should have the independent audit as a voluntary audit. Even though the independent audit is done, directors of the pension funds should confirm the audit report of the private placement funds.
3. Independent audit of the investment management companies
It is desirable that independent audit should be conducted for the investment management companies. Even though the audit is done, directors of the pension funds should confirm the audit report of the companies.
4. Inspection on the asset management of the pension funds and the report for the internal control
Investment management companies should prepare financial statements in accordance with the GIPS, and it should be inspected by the CPAs. In addition, it is effective that directors of the pension funds confirm the assurance report for the internal control of the management process of the investment management companies, which should be issued by CPAs.
※GIPS： Global Investment Performance Standards
These proposals will be effective and preventive measures for the loss of pension funds and will be expected to protect the participants of the pension funds.
