Internal Controls and Corporate Governance is the buzz word today. Post Enron and world com in America, regulators are trying their best to sustain investor’s confidence in the corporate world. Sarbanes Oxley’s Act is also one of the results of such thinking process. All over the world, such steps are taken to regulate public companies to take care of interest of stakeholders. In London, combined code is working in the same direction and in India, clause 49 is steering the boat.
In Japan also the problematic disclosure of false information in financial statement reports was a major concern in the past. Like the scandals of Enron and WorldCom, the former executives of Livedoor which is a Japanese major internet portal service provider like Yahoo Japan were arrested on charge of fraud. Regulators in Japan, though culturally different from Western and European countries, were equally concerned about taking care of such confidence and interest. By the end of 2004, stimulated distrust toward Japan’s securities market forced the wholesale review of Japan’s disclosure system. Consequently, in December 2004, the Financial System Council of the Financial Services Agency (FSA) recommended that assessment and verification of internal controls related to financial reporting be made compulsory in order to guarantee the credibility of the disclosure system.
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