In both Japan and the United States, a small number of accounting firms audit the great majority

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In both Japan and the United States, a small number of accounting firms audit the great majority of large public companies. Identify the advantages and disadvantages of this "market structure" for independent audit services.

To prevent Kanebo, Ltd. from being forced to liquidate, the Japanese federal government placed the company in a "rehabilitation" program under the direction of the Industrial Revitalization Corporation of Japan (IRCJ). The government-sponsored and government-funded IRCJ had been created in April 2003 to help financially distressed companies obtain the capital they needed to survive and to provide them with "turnaround" advice from professional business consultants. Under the leadership of the IRCJ, Kanebo sold off its large cosmetics subsidiary and received more than $1 billion in government-guaranteed loans and waivers of outstanding loans. In 2006, a large investment fund purchased a majority of Kanebo's stock and took over control of the company from the IRCJ.

ChuoAoyama lost approximately one-third of its audit clients, including more than 200 publicly listed clients, during the two-month suspension imposed by the FSA. These companies included ChuoAoyama's two most high profile audit clients, Sony Corporation and Toyota Motor Corporation. While serving the suspension, ChuoAoyama underwent an extensive internal review to strengthen its quality control functions and changed its name to the Misuzu Audit Corporation.17

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
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