Financial Administration and Bank Accounting and Audit

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1. The reason why the levels of allowance for loan losses (ALL) were lower than necessary until 1997 was unclarity of the standards for ALL promulgated by Ministry of Finance.2. It is difficult to conclude that accounting standards existed to determine the appropriate amount of allowance for loan losses to be provided by banks for the period ended March 31, 19983. It has become clear that the audit results by Certified Public Accountants (CPAs) can be denied by Financial Service Agency(FSA)because FAS is the regulatory agency of CPAs.4. The contents of "Joint Policy" issued by the US banking regulators in 2006 are essentially the same as those of "Joint Interagency Letter to Financial Institutions" issued in 1997.5. Pronouncements of the Japanese Institute of Certified Public Accountants (JICPA) are affected by Financial Revitalization Program and are not theoretical in accounting sense.6. The term "adequate" used on the Financial Inspection Manual may lead to the overstatement of allowance for loan losses.7. From considerations of UFJ's case we concluded that ALL is determined by FSA and audits of CPAs are easily denied.8. Researches on financial inspection and audit of accounting for deferred tax and failure of the jusen housing loan companies are necessary.