The audit subcommittee of the Business Accounting Council published a draft revision of Japan's auditing standards on 16 October 2026 and opened it to public comment. The draft covers two topics: going concern, meaning the assumption that a company will keep operating, and fraud. Only the first leads to changes in the standards text.
A longer look-ahead
Current practice has auditors test management's going-concern assessment and response plans over a reasonable period that is at least one year from the closing date. The draft would require a review of at least one year after the approval date for publication of the financial statements. The draft says the longer view makes audited statements more useful for decisions and brings Japan closer to the revised international auditing standard.
The draft notes that the Accounting Standards Board of Japan is developing a going-concern accounting standard that is being considered to set management's own evaluation period on the same basis. Where an applicable accounting framework defines the approval date, the auditor follows that definition. Where it does not, the auditor decides what is appropriate.
A report section even when all is well
Today the audit report carries a separate going-concern section only when a material uncertainty exists. The draft keeps that requirement and adds a separate section where no material uncertainty is found. The comparison table shows the revised text applying to both cases, with the auditor describing the going-concern matter after considering management's assessment.
For listed-company audits, the draft would also require an explanation of how the auditor examined management's assessment. This applies when the report notes a material uncertainty, or when it says none was found and management made significant judgments to reach that conclusion. The draft expects the explanation to carry information specific to the audit, referring to the going-concern note where an uncertainty is reported.
Fraud: no change to the standards
The subcommittee concluded that the standards and the separate fraud risk response standards need no revision on fraud. Its reasoning is that they already include responses the revised international standard newly introduced. Two items, procedures when fraud or suspected fraud is identified and a clear heading on key audit matters tied to fraud, would be handled in practice guidance instead.
Deadline and timetable
Comments are due by 17:00 on Monday 16 November 2026, by post or through the e-Gov website. The revised standards would apply to audits of financial statements for fiscal years ending March 2028. The draft says related laws and regulations should also be adjusted, and asks the Japanese Institute of Certified Public Accountants to prepare practice guidance quickly.
These are consultation proposals. Nothing is final until the council adopts a revised text.