Japanese Firms Navigate Separation of Audit and Consulting Work

Japanese accounting firms are grappling with how best to meet year-old ethics code revisions that require them to fully separate their audit work from affiliated consulting and advisory lines of business.

The ethics code revisions by the Japanese Institute of Certified Public Accountants, the industry’s self-regulating body, are designed to eliminate so-called “self-review threats"—situations where auditors check their own work or that of their colleagues, compromising their objectivity.

The revised code took effect on April 1, 2023, less than two weeks before Ernst & Young LLP shelved its plan to split into an audit firm and a separate, publicly traded ...