By Taro Fujimoto

Executive Impact Apr. 08, 2008 - 02:16PM JST ( 1 )

After numerous accounting scandals and corporate crimes, laws related to corporate accounting and auditing have been amended in Japan. At the operational level, listed companies are required to process their financial reporting with more extensive internal control. The new rules took effect from April, 2008.

Formerly a subsidiary of Deloitte, one of the world’s biggest audit, financial advisory, risk management and tax firms, Resources Global Professionals Japan KK was established in 2004 to provide its clients with global standard audit and accounting services. The company’s 100 professionals all have either Japanese or American public accountant qualifications or significant professional experience.

Heading up the Tokyo office is regional managing director Hiro Ueda. Born in Osaka, Ueda graduated from Waseda University in Tokyo and then went on to obtain his MBA at University of Denver. He joined Deloitte in 1991 and acquired a U.S. CPA qualification during his nine-year career there. After working for Morgan Stanley in the investment banking area for three years, Ueda helped launch Resources Global Professionals Japan KK in 2004 and has been in his current position since then.

Japan Today reporter Taro Fujimoto visits Ueda to hear more about corporate auditing and accounting in Japan.

What services do you offer your clients?

We provide our corporate clients with advice and support on internal audit and accounting affairs. We also help them build and improve information systems for their financial affairs, which varies according to individual clients.

What is the current situation of auditing and accounting in Japan?

So far, the financial/accounting system in a typical Japanese company has been a sort of “black box.” People working there believed it could be complicated or done based on their own original rules as long as they provide “good-looking” financial information to their audit agencies finally. The recent changes in the law related to corporate audit and accounting request companies in Japan to comply with the more transparent standards in these processes. So, they now need to revise their tradition in the related departments.

What has been the biggest problem for Japanese companies?

As is often the case in many Japanese companies, the mobility of human resources is very low, especially in financial and audit departments. The financial department is often isolated from other departments. The involvement of third parties in accounting and audit management used to be very unique in Japan.

In Japan, internal auditing has been generally based on an idea that highly-committed colleagues do not harm their companies. They believe that they don’t need to perform a significant internal audit of their own company. In fact, when the lifetime employment system was still dominant, for an employee to commit a crime in his/her company was very risky. Some corporate crimes, related to auditing and accounting, like the Kanebo scandal, were actually caused by a nonsensical corporate culture in which employees have to obey internal rules. I think they are under a sort of “spell.”

In foreign companies, the frequent changes in a company’s leadership resulted in the standardized processes in auditing and accounting, which makes it easier for third parties to give them advice and suggestions. In Japanese companies, third-party auditors, for example, have to learn the particular systems their clients have built.

How do you see the recent changes in corporate auditing and accounting in Japan?

I think it is not the right time for companies in Japan to discuss if the new rules and laws are good or bad. We first need to comply with the new rules. The next step will be to discuss how useful the new rules are for companies.

What kind of people are ideal for your company?

We still lack experienced professionals. Because companies need outside help in internal audit and accounting these days, we need more human resources to meet such an increasing demand. Accounting is to record data. Internal auditing is to ensure the accounting is done properly. The new law in Japan requires companies to treat both equally importantly. Hence, those who are capable of both auditing and accounting are necessary. Young accountants without experience in companies are not actually useful. We need more accountants with corporate experience.

Your company is famous for its work-life balance. How does it work?

In our company, we try to make sure to assign projects to our associates based on their skills and working styles as well as their chemistry with clients so they can meet clients’ demands. Although we ensure the quality of our professional is excellent, we also don’t interfere so much in individual projects implemented by individual associates because we respect those who are in the front lines. As long as clients are satisfied with what our associates offer, that’s OK.

What current issues do you face?

We would like more companies in Japan to know our services. In addition, the lack of human resources is one of the biggest issues now. Since our company is seen by job-seekers as a company accepting only bilinguals, we need to change such an image in the market. We need not only bilinguals but also those who can’t speak English because we of course have Japanese companies as clients.

What are your future prospects?

We see two different markets now: clients and employees. For clients, what we offer to them should be reasonable in terms of qualities of service and the fee we charge. For employees, including prospective ones, the company should be more attractive to them as a working environment. Furthermore, we would like to help many companies enhance their auditing and accounting systems through our professional services, which will ultimately improve their competitive power in the global market.

What’s your management style?

I always try to provide our employees with a comfortable working environment, such as stress-free atmosphere and up-to-date information technology, in order to bring out an individual’s best.

How do you spend your weekends?

I always spend weekends with my 7-year-old son and 2-year-old daughter. On Saturday and Sunday, I coach my son’s baseball team.