“Solutions for Your Success”
At the heart of our mission is a commitment to enhance the reliability of financial reporting for the Japanese subsidiaries of foreign companies as well as domestic companies. By delivering accurate, insightful, and timely financial information assured by HLS Global to parent companies, we support transparency, operational efficiency, and strategic predictability across global business operations in Japan.
Our team of audit professionals brings deep expertise not only in Japanese GAAP, but also in IFRS and U.S. GAAP, allowing us to navigate the complexities of international accounting frameworks with precision. As licensed Certified Public Accountants in Japan, we offer decades of experience providing high-quality audit and assurance services to multinational enterprises operating in Japan.
Beyond statutory audits, we also specialize in a wide array of assurance solutions tailored to the unique needs of multinational companies operating in Japan. These include group reporting audits based on group auditor instructions, voluntary audits designed to monitor subsidiary performance, reviews, and agreed-upon procedures engagements for entities not subject to statutory audit requirements under Japanese corporate law.
With a seasoned team of audit professionals who possess extensive international business acumen, we can engage directly with the executives of the parent company, bridging cultural and linguistic nuances with clarity and confidence in both English and Japanese. Our clients consistently commend our responsiveness, clear communication, and ability to deliver insights that go beyond compliance.
For multinational companies operating in Japan, reliable subsidiary reporting is essential for parent-company consolidation, internal control, business planning, and timely decision-making. HLS Global supports such requirements by providing audit and assurance services that help strengthen the credibility and usefulness of financial information prepared in Japan.
Multinational companies often need to bridge Japanese statutory accounting requirements with group reporting under IFRS, U.S. GAAP, or under the accounting policies as stipulated by the parent company. Our audit professionals understand Japanese GAAP as well as the expectations of international finance teams, enabling efficient communication around audit adjustments, reporting packages, and accounting judgments.
Not every entity is legally required to undergo a statutory audit in Japan. These requirements may vary depending on the stated capital or outstanding liabilities of the Japanese entity. Even so, parent companies may require assurance over subsidiary performance, financial controls, specific account balances, or reporting packages. HLS Global offers practical assurance solutions, including reviews and agreed-upon procedures, designed to meet the assurance level, scope, and cost expectations of each client.
Our team of bilingual audit professionals can communicate directly with the executives of the parent company, or with the finance teams, and group auditors in both English and Japanese. This reduces friction in cross-border engagements, accelerates responses to audit instructions, and helps overseas stakeholders clearly understand the financial position and accounting issues of their Japanese subsidiaries.
Under Japanese corporate law, a company classified as a “Large Company” must have a financial auditor. A financial auditor must be a Certified Public Accountant or an audit firm. A company becomes a “Large Company” if either of the following criteria is met:
Criteria | Large Company Threshold |
Stated Capital | JPY 500 Million or more |
Total amount of liabilities | JPY 20 Billion or more |
These thresholds are judged based on the balance sheet as of the end of the latest business year. For a newly incorporated stock company whose first annual shareholders meeting has not yet been held, the judgment is made based on the balance sheet as of the day of incorporation.
Financial statements are approved by means of the annual shareholders’ meeting. Depending on whether a company has a board of directors, a company auditor, and a financial auditor, the closing process may include audit procedures, board approvals, notices of calling the annual shareholders meeting, and shareholder approval. For companies with a financial auditor, the timetable should be planned early because certain audit and governance steps cannot simply be shortened.
For multinational companies operating in Japan, coordination between the Japanese statutory closing schedule and the parent company’s reporting deadline is often one of the most important practical issues. HLS Global supports clients by clarifying the required steps, communicating with group auditors, and helping management complete the audit process effectively and efficiently.
Japanese financial statements generally consist of the balance sheet, profit and loss statement, statement of changes in shareholders’ equity, and tables of explanatory notes. The required contents of the explanatory notes differ depending on whether the company has a financial auditor and whether the company is publicly listed or privately held.
The explanatory notes may include matters such as important accounting policies, changes in accounting policies, correction of errors, balance sheet information, tax effect accounting, financial instruments, related-party transactions, per-share information, important subsequent events, revenue recognition, and other matters.
HLS Global helps multinational companies understand these local requirements and prepare audit-ready financial information.
Audit services for companies subject to Japanese statutory audit requirements
HLS Global provides audit and assurance support for Japanese subsidiaries of multinational companies that are required to have a financial auditor under Japanese corporate law. Our professionals help clients navigate Japanese audit requirements while maintaining smooth communication with overseas parent companies and group auditors.
We support management throughout the audit process, from planning and audit instruction review to fieldwork, accounting issue resolution, reporting, and final delivery of audit results.
Audit procedures performed based on group auditor instructions
Many multinational companies require audit work in Japan for group consolidation at the parent company, even when the Japanese entity is not subject to a statutory audit. HLS Global performs group reporting audits in accordance with instructions from the parent company’s group auditor.
We can coordinate directly with group audit teams in English and help ensure that reporting packages, audit deliverables, and timelines meet the expectations of the parent company.
Practical assurance designed to monitor subsidiary performance
A voluntary audit can provide parent companies with additional comfort over the financial condition and operating results of a Japanese subsidiary. This is particularly useful for newly established subsidiaries, growing operations, management transitions, or subsidiaries with increased transaction volume.
We tailor the audit scope to the client’s needs, balancing assurance level, reporting usefulness, timeline, and cost.
Limited assurance engagements for companies that do not require a full audit
Reviews can be an effective option when a parent company needs assurance but does not require the same level of procedures as a full-scope audit. HLS Global helps clients understand the differences among audits, reviews, and agreed-upon procedures, and proposes a scope that fits the intended purpose.
Our review engagements may include English management reports and direct debriefings with overseas finance teams to help parent-company stakeholders understand the Japanese subsidiary’s financial results.
Targeted procedures focused on specific accounts, transactions, or reporting needs
Agreed-upon procedures engagements can be used when a parent company wants specific work performed over selected areas, such as cash, revenue, expenses, intercompany balances, payroll, or other financial information.
Because AUP engagements are flexible and targeted, they can be a cost-effective way to address specific matters or concerns defined by the parent company or for internal reporting requirements.
Support for J-GAAP, IFRS, and U.S. GAAP Differences
Multinational companies frequently need to reconcile Japanese accounting results with the accounting standards of the parent company. HLS Global supports our clients in identifying and explaining differences between Japanese GAAP and IFRS or U.S. GAAP, including audit adjustments required for group reporting.
Our experience allows us to discuss technical accounting matters with both local management and overseas accounting teams in clear, practical English.
Clear audit communication for decision makers overseas
We can prepare reporting deliverables, in both English and Japanese, that address significant accounting matters, audit findings, financial reporting issues, and other matters relevant to the finance teams of the parent company.
As and when needed, we can also conduct direct debriefing sessions in English with the executives or finance teams of the parent -company, helping them gain a deeper understanding of the financial position of the Japanese subsidiary.
HLS Global has deep experience supporting multinational companies in Japan from a variety of regions or having different accounting standards, assurance scopes, and reporting schedules.
Selected experience includes the following:
Category | Percentage of Engagements |
United States | 25.0% |
China | 18.8% |
Germany | 12.5% |
United Kingdom | 12.5% |
Other | 31.2% |
Category | Percentage of Engagements |
IFRS | 50.0% |
US GAAP | 31.2% |
J-GAAP | 18.8% |
Category | Percentage of Engagements |
Full-scope audit | 60.0% |
Review | 20.0% |
Agreed-upon procedures | 20.0% |
Category | Percentage of Engagements |
December year-end | 90.0% |
March year-end | 10.0% |
This engagement marked the inaugural attestation service provided for the Japanese entity of the client. We clarified the distinctions among audits, reviews, and agreed-upon procedures, and initiated work under a scope that met the client’s expectations in both cost and assurance level.
Comprehensive management reports were prepared in English, addressing all significant accounting matters, and a direct debriefing session was conducted in English via web conference with the finance team of the parent company.
The client provided highly positive feedback, noting that our reporting greatly enhanced their understanding of the financial position of their Japanese subsidiary.
This engagement was the first full-scope audit of the Japanese subsidiary of the client. When the engagement started, the fiscal year-end had already passed, and there was only one month left until the deadline for the audit report.
We immediately began audit procedures upon receiving the audit instructions from the group auditor. Since this was the first audit, we requested several adjustments from Japanese GAAP to IFRS. With the client’s strong support, we were able to issue an unqualified audit opinion within the stipulated deadline.
The main communication was with the accounting team of the parent company. Since direct and transparent communication in English was possible, the client provided very positive feedback regarding this engagement.
Keep up with the latest audit, assurance, accounting, and financial reporting topics for multinational companies operating in Japan on our blog.
HLS Global provides practical audit and assurance services for multinational companies operating in Japan. We combine local Japanese CPA expertise with international business experience, enabling us to support both Japanese subsidiary management and stakeholders of the overseas parent company effectively and efficiently.
Foreign companies in Japan often need more than a standard audit process. They need an advisor who understands the expectations of overseas headquarters, group auditors, global accounting policies, and local statutory requirements. HLS Global provides services tailored to such needs, from statutory audits and group reporting audits to reviews and agreed-upon procedures.
We help clients manage audit requirements across borders by communicating clearly in English, coordinating directly with the finance teams of the parent company, and addressing accounting matters in a way that supports both local compliance and group reporting objectives.
HLS Global serves clients through our network of overseas affiliates and alliance partners in various global regions including Japan, the United States, Mexico, India, Germany, the UAE, China, Hong Kong, Indonesia, Malaysia, the Philippines, Singapore, Thailand, the United Kingdom, and Vietnam. As a member firm of ASTHOM Partners, we support clients with local execution and an international perspective.
* Please note that all audit work will be performed by CPAs and Audit Professionals of HLS Global Co., Ltd.; however, the audit engagement agreement will be executed, and the audit report will be signed, through the CPA office with which the relevant CPA of HLS Global Co., Ltd. is registered.
