1. Accounting (Sanctions to E&Y ShinNihon)
On December 22nd 2015, the Financial Services Agency (FSA) imposed a 2.1 billion yen administrative monetary penalty on Ernst & Young ShinNihon LLC (ShinNihon).
The sanctions include a three months suspension from taking on new business contracts and an operational improvement order. This is the first time in history an auditing firm has had a monetary penalty imposed on it.The sanctions on ShinNihon led to the resignation of six managing directors, the CEO and a managing executive officer.
They also withdrew from audit engagements for the next fiscal year.
The reasons for the sanctions are:
(1)ShinNihon audited the financial statements ending March 2010, 2012 and 2013 of Toshiba Corporation. Although these financial statements contained material misstatements due to a breach of due care by seven accountants, ShinNihon concluded that the financial statements of Toshiba were free of material misstatements.
(2)The FSA concluded that their operation is remarkably unfair.
This Toshiba scandal may bring a dramatic change to the environment surrounding auditing firms.
2. Tax(Outline of the 2016 Tax Reform Proposals-Consumption tax)
In December 2015, the coalition government released the Outline of the 2016 Tax Reform Proposals. Among the Tax Reforms proposed, the following points have most likely been determined for consumption tax.
(1)When the consumption tax rate is increased to 10% in April 2017, a reduced tax rate will be implemented. The current tax rate of 8 % will be applied to sale of all food and non-alcoholic beverages excluding items consumed at restaurants. This reduced tax rate is also applicable to newspapers published at least twice a week.
(2)To be eligible to take an input tax credit, “Qualified Invoice Issuing Entities” (tentative name) are required to retain “Qualified Invoices”(tentative name), so-called a「Invoice System」will be implemented.
(1)It will be applied as of April 1st, 2017 for a transfer of eligible assets etc.
(2)It will be applied as of April 1st, 2021 for a transfer of eligible assets etc.
However, within about 3 years or less, a questionnaire survey is scheduled to be conducted mainly small and medium-sized entities and, legislative measures are to be taken as needed.
3. Labor Management(“My Number” required on Employment Insurance Forms from January 2016)
From January 1, 2016, employers need to collect their employees’ “My Number” (Individual Numbers) as the numbers are required for the following Employment Insurance forms:
(1) Insured person report for Employment Insurance
(2) Loss of qualifications report for Employment Insurance
(3) Application for Continuous Employment Benefits for the Elderly (*)
(4) Application for Childcare Leave Benefits (*)
(5) Application for Family Care Leave Benefits (*)
(*) My Number is required when an employer submits these applications on behalf of an employee.
When submitting the above forms by post, it is recommended to use a trackable delivery service such as registered mail. Due to this change, more companies are expected to start using the government’s Electronic Application System.
4. This Week’s Words of Wisdom(Great talents flower late)
“In Japan, there is a saying “Great talents flower late”. However in reality, in my opinion, those people just escaped from making their best efforts at the beginning of their life “
(Kenichi Ohmae, Business Consultant)
This is well said. If you read 「Ryoma ga iku」(Ryoma goes), you feel like Ryoma Sakamoto suddenly became talented after fully maturing. In fact, however, he was a smart student from his childhood who was allowed to go “Edo” to study.
In a nutshell, only persistent effort is a passport to move on to the next step.
The referring page is Nagamine & Mishima JC Accounting K.K.