A Japanese Way for 2000 Beyond the Bubble Crash

Abstract

During the bubble economy and its resulting collapse in the 1990s, the Japanese accounting and auditing system was under scrutiny and was accused of having a lack of confidence. There were several critical comments such as “Japan confused financial reporting goals with national fiscal policy and the Ministry of Finance and central bank seemed ready to measure only what was politically managed” and “the reputations of the big international firms enjoyed some protection from audit liability thanks to a Japanese corporate culture that imposed strong non‐contractual bonds of loyalty and integrity”. The problems existed not only in accounting and auditing but also in many other areas of the economy. As a result, in the late 1990s the Japanese economy has started to struggle to adapt to the so‐called “global standard”. Former Prime Minister Hashimoto announced in 1996 that Japan would implement a big bang approach to its financial industry until 2000. These efforts are made not to cope with the long depression but to reshape the Japanese economy to enable survival in the global economic arena in the next century. In public accountancy, many measures have been implemented to reshape the whole system.