J-SOX Compliance (Japanese Implementation of SOX)

Following the lead of the US implementation of SOX, the Japanese government has begun work towards a similar law in Japan that is commonly called J-SOX. The Japanese implementation shares a number of features with the US SOX law but with a few differences.

While still in the planning stages, the J-SOX implementation will call for Top-down and risk-based approaches similar to SOX. The J-SOX law currently calls for a COSO-like framework while the US SOX law does not specifically mandate a framework.

The following describes the key similarities and differences between J-SOX and SOX.

Key SOX and J-SOX similarities:

• Evaluation by management based on an internal controls framework
• Both include an audit requirement
• Identification of Major Systems, Risks and Controls
• Top-down and Risk-based approaches required

Key SOX and J-SOX differences:

• J-SOX mandates a specific framework while SOX simply requires a selection of a "suitable" framework
• J-SOX audit requirement calls for the auditor to opine on management's evaluation of internal controls where SOX requires an auditor opinion on the effectiveness of internal controls

J-SOX has not yet been established as law in Japan but some form of internal controls regulation will likely become law this year. As further details emerge, we cater our Internal Controls products to meet the specific needs of the new market.