A delegation from Japan is scheduled to visit the United States this week in an effort to convince the SEC and other enforcement agencies to exempt its accounting firms from certain provisions of the Sarbanes-Oxley Act.
In a letter sent to the AICPA immediately after the Act was signed in July, the Japanese Institute of CPAs expressed concern that "the implementation of the Sarbanes-Oxley Act would place U.S. laws above the Japanese Securities and Exchange Law and CPA Law and clearly violate international treaties and infringe upon Japanese sovereignty."
The Sarbanes-Oxley Act encompasses foreign firms as well as domestic firms within its reach:
Sarbanes-Oxley Act, §106(a)(1): IN GENERAL. - Any foreign public accounting firm that prepares or furnishes an audit report with respect to any issuer, shall be subject to this Act and the rules of the Board and the Commission issued under this Act, in the same manner and to the same extent as a public accounting firm that is organized and operates under the laws of the United States.
But a provision is also included in the Act which states that the SEC has the authority to exempt any individual firm or class of firms from this provision if it determines that the exemption is in the public interest.
The representatives of the Japanese Institute of CPAs, the Japan Corporate Auditors Association, and Financial Services Agency will discuss Japanese auditing regulations with US officials and hope to prevent Japanese firms from double regulation in performing their auditing responsibilities.