Accounting and auditing in Japan, as in other countries, are a reflection of its history and combine many different strands and influences. As far as large, listed companies are concerned, the infrastructure of financial reporting derives from a complete reorganization of the financial markets in the late 1940s. During the reconstruction of the Japanese economy which followed the Second World War, many Western, and particularly US, ideas were adopted. The stock exchange was reformed and laws introduced similar to the US 1933 Securities Act and 1934 Securities and Exchange Act. The Ministry of Finance also set up a committee, whose successor is the current Business Accounting Deliberation Council (BADC), to specify accounting standards for listed companies.

The regulations for listed companies were created alongside existing accounting rules for limited liability companies which are in the Commercial Code. Listed companies have therefore to prepare two sets of statements. A further constraint upon reporting is the tax statutes which specify some measurement rules for tax purposes. The combination of these three sets of regulations is known as the triangular legal system, and the necessary interplay of the three does not easily permit the rapid evolution of rules. The accounting rules are, however, largely in line with those used in the rest of the world.

Auditing was introduced as part of the post-war reforms, when the Ministry of Finance took on responsibility not only for accounting standards but also auditing standards. This responsibility was passed in 1991 from the BADC to the Japanese Institute of Certified Public Accountants (JICPA). Initially the audit requirement was limited to listed companies, but in 1974 it was extended to large, private companies, and currently some 9,000 companies are subject to independent audit.

Auditors must be members of JICPA, which was also created in the 1940s. Admission to JICPA is by way of a series of professional examinations. There is a second, related profession, that of tax practitioner, of which there are about 6,000. Many certified public accountants are also tax practitioners, but they cannot provide both tax and audit services to the same client. JICPA provides technical advice and support to its members, and issues audit standards. It is also active in the international field.