Compliance with the Japanese Sarbanes-Oxley Act is compulsory for almost 4000 Japanese companies listed on the Tokyo Stock Exchange (TSE). On 15 February 2007, the Japanese Financial Services Agency released the new Japanese standards for evaluation and auditing of internal controls over financial accounting, commonly referred to as J-SOX.
Companies listed on the TSE are obliged to prepare and submit internal control reports on a consolidated basis starting from the fiscal year commencing on or after 1 April 2008. Management must examine and evaluate the internal control over financial reporting of its own company, prepare reports of its conclusions, and be subject to audit by its external auditors. [The objective of both the US and Japanese SOX is to achieve compliance with the law, i.e., to have documentation of the control environment attain such a level that a positive statement is obtained from the external auditors. For companies subject to SOX, testing of the SOX environment is part of the audit.