Japan’s Small Accounting Firms Pressed to Forego Audits or Merge

A pair of new rules this spring is placing pressure on about 130 small and mid-sized Japanese accounting firms to grow through mergers or give up auditing listed companies altogether.

A newly revised pubic accounting law that took effect starting April 1 gives the Japan Institute of Certified Public Accountants (JICPA) legal authority to expel firms that fail to comply with its conflict-of-interest policies. JICPA, the industry’s self-regulation body, also imposed a new rule last month limiting its members’ auditing fees from a single client to 15% of their overall revenue.

“I think mergers ...