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PwC JapanNow and the Future

2010/2011 Annual Review

© 2010 PricewaterhouseCoopers Aarata, PricewaterhouseCoopers Co., Ltd.,Zeirishi-Hojin PricewaterhouseCoopers. All rights reserved. In thisdocument, “PwC” refers to PricewaterhouseCoopers Aarata,PricewaterhouseCoopers Co., Ltd., Zeirishi-Hojin PricewaterhouseCooperswhich is a member firm of PricewaterhouseCoopers International Limited,each member firm of which is a separate legal entity.

We will support the transformation of the companies of tomorrow and ultimately contribute to shaping the future of Japan

C o n t e n t s

PwC Japan’s Commitment 4

Supporting Our Clients’ Development as One Firm 6

An Integrated Approach to Client Service 7

A One Firm Approach and Global Network— PwC’s Strengths 8

Helping Japanese Companies Resolve Their Most Critical Issues 9

Services to Enhance Competitiveness 9

Supporting Business Transformation through IFRS 10

Comprehensive Services for Financial Institutions 11

Bringing Deep Experience to Our Clients 12

History of PwC Japan 13

Putting Ourselves in Our Clients’ Shoes 14

Evolving for the Benefit of Our Clients 16

Emphasizing Intellectual Flexibility in Personnel Development 16

Rigorous Quality Control and Risk Management 18

Contributing to the Community 19

Our Working Environment 19

Expressing a Point of View 20

Facts & Figures 21

Global Network 22

Contacts 23

4 2010/2011 Annual Review 5PwC Japan Now and the Future

More than two years have passed since the collapse of Lehman Brothers triggered a worldwide financial crisis. The center of gravity of the global economy is shifting from the US and Europe, separated by the Atlantic, to the US and China, separated by the Pacific. Meanwhile, East Asia, with China as its core, has emerged as a major consumer market underpinned by a rising middle class in addition to its role as a manufacturing base.

Companies operate in fast changing competitive environment. Examples of this rapid change include accelerating innovation in IT, biotechnology, and fields related to the environment, wider adoption of International Financial Reporting Standards (IFRS) and a worldwide trend toward stricter financial supervision and regulation. In these circumstances, many companies have

come under pressure to review strategies and innovate business models in order to ensure survival and lay a foundation for future prosperity.

PricewaterhouseCoopers Japan (PwC Japan) supports clients in their efforts to create lasting corporate value and achieve enhanced credibility in capital markets.

PwC Japan is the collective name for PricewaterhouseCoopers Aarata, PricewaterhouseCoopers Co., Ltd., Zeirishi-Hojin PricewaterhouseCoopers, and their affiliates. The present-day PwC Japan is the culmination of numerous reorganizations involving the establishment of new companies, corporate separations, and mergers. However, we are actually Japan’s oldest international professional

services firm, tracing our history back to an accounting office that opened approximately 60 years ago.

When the firm first opened, it performed audits for international companies and quickly became a leader in cross border services: for instance, we audited the consolidated financial statements for the first ADR stock issued by a Japanese company. Since 1949, PwC Japan has been supporting the development of companies in the global economy while contributing to the development of the Japanese economy.

Comprehensive Global ServicesToday, PwC has offices in 766 cities in 154 countries around the world and employs more than 161,000 people, including professionals in the fields of assurance, advisory (consulting and

deals), and tax. We offer services to clients in countries with differing legal systems, cultures, and languages. We continually strive to leverage the knowledge, experience, and relationships accumulated through this global network for the benefit of our clients.

PwC Japan was among the first firms in Japan to offer comprehensive assurance, advisory, and tax services. The one-stop delivery of global professional services is the essence of PwC Japan’s One Firm concept and has remained a tradition since the founding of the firm.

In a challenging global economic environment, many companies in Japan and abroad are under pressure to transform the way they do business and enhance management of globally diverse operations. Clients

increasingly look to PwC to propose solutions, from the project planning stage onward, that are both optimal and sustainable over the medium to long term, capitalizing on our global capabilities in assurance, advisory, and tax services. PwC’s One Firm approach and experience help global companies succeed in competitive international markets.

One Firm ApproachPwC’s cross-functional approach provides a flexible means of meeting client needs whilst ensuring at all times thorough compliance with legal and regulatory requirements, including those related to audit independence and information security.

In conjunction with PwC’s recent renewal of its branding worldwide, PwC Japan is further developing our

services to deliver added value to clients.

Our goal is that “We will support the transformation of the companies of tomorrow and ultimately contribute to shaping the future of Japan.” At PwC Japan, inspired by this vision, we continue to transform ourselves with the aim of becoming “The No. 1 professional services firm.”

PwC Japan Management Team

PwC Japan’s Commitment

From right to left

Koichiro Kimura, John McCaffrey

Sachiko Toki, Akira Yamate, Shiro Uchida

Koji Hatsukawa, Hiroyuki Suzuki

Katsunori Sasayama, Matthew Wyborn

Masataka Mitsuhashi


Supporting Our Clients’ Development as One Firm

Proposal from PwC Japan

The operating entities of PwC Japan are:

Audit and assurance servicesPricewaterhouseCoopers Aarata

Advisory services (consulting, deals)

PricewaterhouseCoopers Co., Ltd. Tax services

Zeirishi-Hojin PricewaterhouseCoopers

As the growing complexity of business makes it ever more difficult for companies to chart a winning course, clients are increasingly turning to PwC. For example, Japanese companies introducing IFRS require not only advice on auditing and accounting, but also consulting on reconstructing mission-critical systems and business processes.

Moreover, close collaboration among CPAs, M&A and turnaround

specialists, certified tax accountants, systems specialists, and other professionals is essential for resolving issues concerning international M&A, reconstruction of international supply chains, and other complex matters.

PwC Japan assurance, advisory, and tax specialists seamlessly collaborate through a One Firm approach to tackle complex projects from multiple perspectives, identifying the critical issues, and devising, innovative solutions.

Acting as One Firm while Maintaining IndependenceA high degree of independence is required for audit and assurance services. In addition to restrictions on the provision of advisory services to clients receiving audit and assurance services, appropriate information

control is required, such as a firewall separating audit and assurance services from advisory services. Our tax services and audit and assurance services are delivered through separate and independent legal entities, as requied by law.

While rigorously observing laws and regulations governing independence and information control, PwC Japan’s assurance, advisory, and tax entities act as far as possible as one in the delivery of services to meet client needs. PwC Japan requires from every member of staff the highest level of professional skills, independence, professional ethics and integrity.

PwC aspires to build a reputation as the industry’s most exacting, fair, and impartial group of professionals.

Client needs

FirmOne

Assurance T a x

Advisory

When Japanese consumer goods manufacturers expand into emerging economies, they must grasp the needs and aspirations of local consumers. PwC offices in emerging economies, whose staff include many Japanese, are ready to support companies in their efforts to achieve success.

For example, when shopping for home appliances, consumers in India often want features that are very different from those desired by consumers in Japan. Popular items in India include refrigerators equipped with locks and LCD televisions whose screens are less bright than those sold in Japan. In some regions, the functions of Japanese products tend to exceed what is required.

PwC supports clients’ expansion into emerging economies by swiftly grasping region-specific needs and providing multifaceted advice on market dynamics, manufacturing costs, and supply chain management.

Case1

A growing number of Japanese companies are seeking growth through business expansion in China, India, and the ASEAN countries. Increasingly, clients recognize that the problems they encounter when pursuing growth overseas require a diverse range of specialist skills that cannot be found within the traditional M&A advisory firms.

For example, in price negotiations on an M&A deal, tax issues in overseas jurisdictions have an important bearing on the transaction. In many cases, IT systems must be replaced or HR systems modified following an acquisition.

PwC’s One Firm approach means everyone—HR, systems, and tax specialists, in addition to M&A professionals—works together to address the issues confronting clients. We help clients achieve success in international M&A throughout the entire process from pre-acquisition advice and negotiations through to post-acquisition integration and support in taking control.

Case2

Companies increasingly recognize the importance of effective disclosure, not only of financial information for investors and shareholders, but also on other critical themes, including environmental and CSR reports, aimed at a broader stakeholder constituency. For example, PwC provides independent third-party assurance of companies’ environmental management.

At PwC, environmental assurance services are a collaborative endeavor involving CPAs, professional engineers, qualified energy managers, and other specialists. Effective from fiscal 2010, the reporting of soil contamination clean up costs as an environmental liability in companies’ financial statements has become mandatory. We offer a comprehensive service that includes support for the calculation of environmental costs.

Case3

An Integrated Approach to Client Service

Support needed to drive expansion into emerging economies(Electronics manufacturer)

Comprehensive support required for international M&A(Automaker)

An environmental report with investor appeal(Pharmaceuticals company)


Comprehensiveservices

Globalnetwork

FirmOne

Our One Firm corporate culture is based on two complementary strengths: comprehensive services and a global network.

Japanese companies are endeavouring to globalize to secure their future. Against the backdrop of a domestic economy facing the challenges of an aging demographic profile, many Japanese companies are eyeing markets around the world that continue to enjoy high growth. In China, India, and other emerging economies, rising living standards are fueling demand for Japanese companies’ products. In addition, numerous infrastructure projects are

planned or underway across the globe, including power generation plants, railways, telecommunications facilities, and water and sewage systems. Clearly, Japan’s technologies and know-how, including eco-friendly technologies and systems construction and management capabilities, continue to have tremendous potential worldwide.

As an experienced practitioner of international business plugged into the powerful PwC global network, PwC Japan can draw on the knowledge and experience of more than 161,000 PwC staff in 154

countries around the world. PwC has specialists knowledgeable about every region—local systems, laws and regulations, market trends, business customs, and so on. Approximately 200 Japanese-speaking specialists overseas work with other professionals at local offices to support Japanese companies.

Capitalizing on this global network as a hub linking clients with markets around the world, PwC Japan strives to build relationships with clients that help them create the value they are looking for in an era of global competition.

A One Firm Approach and Global Network— PwC’s Strengths Helping Japanese Companies

Resolve Their Most Critical Issues

The challenge for Japanese companies is to prevail in increasingly competitive world markets.

In response to this, PwC Japan places particular emphasis on:1) Support for enhancement of Japanese companies’ international competitiveness2) Support for corporate transformation through IFRS3) Enhanced services for Japanese financial institutions

Supporting Japanese Companies’ Enhancement of International CompetitivenessDrastic changes in the economy and competitive environment lead to increasingly complex and sophisticated issues for business operations. To address these issues effectively for each industry sector and enhance our ability to meet clients’ diverse needs, we are continually upgrading the ways in which we accumulate and share knowledge across PwC’s global network.

Many Japanese companies are seeking to improve their ability to obtain accurate information of various kinds from overseas and accelerate decision-making based on that information. It is not unusual for companies operating overseas to face management risks unimaginable in Japan. Accordingly, companies need to implement global corporate governance systems to grasp and address a range of enterprise wide risks.

Assisting Companies’ Overseas Business DevelopmentPwC Japan provides various services to support Japanese companies entering overseas markets. We offer entrance-to-exit support for cross-border M&A, covering such matters as examination of counterparties, post-implementation business process and efficiency improvement, as well as advice on human capital related issues.

Japanese-speaking PwC staff are ready to provide local support to Japanese companies overseas. Our staff are knowledgeable about the circumstances of Japanese companies and are also familiar with local needs and business customs. PwC Japan actively engages in personnel exchanges with PwC offices overseas, and our people develop their language, communication, and business skills through overseas assignments.

Leveraging a global network and unique know-how, PwC Japan offers powerful support to companies expanding overseas.

Services to Enhance Competitiveness

Leadership Team for International Competitiveness Enhancement Support


PwC provides services to numerous financial institutions, including most of the world’s largest financial groups. With more than 1,100 financial specialists in its assurance, advisory, and tax service businesses representing approximately 30% of the total workforce, PwC Japan is one of Japan’s largest financial professional services firms.

Japanese banks and securities companies face many changes: more demanding capital adequacy requirements, the introduction of IFRS, and stricter supervision by the financial authorities. The insurance industry is also grappling with a number of issues, including a declining birthrate and an aging population, frequent occurrence of natural disasters, the introduction of IFRS, and regulatory system reforms by the financial authorities. Furthermore, financial institutions, just like non-financial Japanese companies, have a pressing need to accelerate business development overseas.

Specialist Team Providing Comprehensive Support to Financial InstitutionsTo provide optimal services to clients in the financial sector, a specialized, complex field characterized by intense international competition, PwC Japan has formed a specialist team comprising managerial personnel from our assurance, advisory, and tax operations. This cross-functional team offers comprehensive support to financial institutions and reflects our belief that a structure emphasizing seamless cross-functional collaboration, is essential for resolving the issues faced by financial institutions.

Moreover, we are ready to support Japanese financial institutions from a global perspective by making full use of PwC’s global network and reflecting, as necessary, the industry-leading practices of overseas financial institutions.

At PwC Japan, we aspire to be a professional services firm that earns the confidence of clients by providing advice and clarity on critical issues. PwC Japan’s financial services group is highly regarded by many clients in the financial sector for its work in the areas of financial reporting processes and risk management. Building on these strengths, we will continue to meet the wide-ranging needs of clients in the financial industry.

Advice on the Implementation and Enhancement of RiskManagement for Banks and Insurance CompaniesFor financial institutions, integrated risk management and control is a prerequisite for maximizing stakeholder value while ensuring soundness based on identification of the diverse risks encountered in the course of business. To support clients’ efforts in this regard, PwC Japan offers the full spectrum of expertise required by financial institutions to identify, assess, control, and monitor risks, recognize revenues corresponding to risks, implement an appropriate capital structure, and optimize allocation of resources.

Comprehensive control of diverse risks—not only credit risk and market risk, but also operational risk, strategic (business) risk, and reputational risk—requires wide-ranging expertise in assurance and tax as well as in financial engineering, IT, governance, and environmental and climate change. We are confident that the One Firm approach, emphasizing collaboration of assurance, advisory, and tax capabilities, offers decisive advantages to clients.

Listed companies in Japan are likely to be subject to mandatory application of International Financial Reporting Standards (IFRS) beginning in 2015 or 2016. The time for Japanese companies to start full-scale preparation for IFRS is fast approaching.

At PwC Japan, we do not view IFRS simply as a replacement for existing accounting standards. Rather, we propose that clients exploit the opportunity presented by the introduction of IFRS to improve and streamline their business processes and systems.

IFRS, an Opportunity for Management InnovationThe introduction of IFRS not only requires that companies change their accounting procedures but, in many cases, also their IT systems. Businesses need advisors who not only understand IFRS but also have the capability and experience to implement IFRS.

The introduction of IFRS also creates an opportunity to review business processes. For instance, a change in the method of revenue recognition from the time of shipment, to the time of delivery and inspection, may require changes to work procedures.

We believe that IFRS introduction projects that are designed to address other issues confronting companies will lead to more effective outcomes. For that purpose, we provide one-stop support for a series of tasks encompassing everything from IFRS introduction and strategy formulation through to improvement

of business processes, systems as well as human capital functions.

IFRS Clarifies the Performance of Overseas OperationsIFRS is essentially a common language for accounting. Generally, Japanese companies doing business overseas obtain performance reports from their overseas subsidiaries prepared in accordance with the accounting standards of the countries in which these entities operate. Once IFRS is introduced, companies can simultaneously obtain information of consistent quality from their business sites around the world, enabling swift decision-making.

Group-wide adoption of IFRS makes it possible for companies to integrate business processes, accounting systems, and management accounting rules that previously differed among subsidiaries. As a result, companies can swiftly obtain quantitative data on the performance of their group companies while reducing indirect and system related costs. Leading European and South Korean companies that have introduced IFRS are said to have benefited from more rapid analysis of performance reports and accelerated decision-making.

PwC’s global network includes offices in Europe and South Korea with abundant firsthand experience in IFRS introduction. PwC Japan includes specialists with practical and relevant IFRS experience who can provide powerful support for IFRS introduction at Japanese companies.

Supporting Business Transformation through IFRS

Comprehensive Services for Financial Institutions

Note: PwC Japan invites you to visit the PwC Japan IFRS website for information on the latest trends and topics concerning IFRS and easy-to-understand explanations. www.pwcjp-ifrs.com

Leadership Team for Financial Institution Support IFRS Leadership Team


Bringing Deep Experience to Our Clients

PwC traces its history back to mid-19th century London where Samuel Lowell Price opened a business in 1849, which was the forerunner of Price Waterhouse. A few years later, in 1854, William Cooper established a practice in London that eventually became Coopers & Lybrand.

In 1998 Price Waterhouse and Coopers & Lybrand, each with some 150 years experience as an auditor, merged to form PricewaterhouseCoopers (PwC), the present-day network.

PwC Japan with more than 60 years of experienceIn 1949, the year in which stock exchanges opened in Tokyo and Osaka, a partner of the Shanghai office (subsequently closed) of Lowe, Bingham Thomsons, a British accounting firm, opened an office in Nishiginza, Tokyo, which was the origin of PwC Japan. The partner, who was a British chartered accountant, became the first foreigner registered as a certified public accountant in Japan.

His office’s practice focused on the audit of foreign companies setting up businesses in Japan, such as trading companies, shipping companies, film distributors, and non-life insurance companies.

In 1961, when Sony issued American Depositary Receipt (ADR) stock to tap US capital markets—the first Japanese company to do so, Lowe, Bingham Thomsons and Price Waterhouse jointly audited Sony’s consolidated financial statements—the first such audit for a Japanese company. Anticipating the internationalization of Japanese companies, Price Waterhouse absorbed Lowe, Bingham Thomsons in 1962 to form Price Waterhouse & Company, a partnership.

Meanwhile, Lybrand, Ross Brothers & Montgomery, the predecessor of Coopers & Lybrand, opened a Japan office in Uchisaiwaicho, Tokyo, in 1965.

PwC Japan’s consulting services, which started in the 1960s with a contract from a shipping company to calculate cartel rebates, had a workforce of more than 1,000 in 2002. In that year, PwC sold the entire consulting business to IBM.

PwC has changed greatly in the last 10 years. For the audit practice, PricewaterhouseCoopers Aarata was established in 2006 as a PwC member firm.

For advisory, PricewaterhouseCoopers Financial Advisory Services Co., Ltd. (PwC FAS) established in 1999 became PwC Advisory in 2004. Following the acquisition of BearingPoint Japan in 2009, the present-day Pricewaterhouse Coopers Co., Ltd. was formed in January 2010. For tax, PricewaterhouseCoopers Tax Office established in 1999 became Zeirishi-Hojin PricewaterhouseCoopers in 2006.

Regardless of organizational changes over the years, our commitment to our clients remains unchanged: we continue to put ourselves in our clients’ shoes.

History of PwC Japan

1849 Samuel Lowell Price sets up in business in London (predecessor of Price Waterhouse).

1854 William Cooper establishes his own practice in London (predecessor of Coopers & Lybrand).

1949 Lowe, Bingham Thomsons opens a Tokyo office (predecessor of Price Waterhouse & Company).

June 1961 Sony is the first Japanese company to issue ADR stock; Lowe, Bingham Thomsons and Price Waterhouse jointly audit Sony’s consolidated financial statements—the first such audit for a Japanese company.

January 1962 Price Waterhouse absorbs Lowe, Bingham Thomsons to form Price Waterhouse & Company.

August 1965 Lybrand, Ross Brothers & Montgomery opens a Japan office in Uchisaiwaicho, Tokyo.

June 1983 Price Waterhouse & Company establishes Aoyama Audit Corporation, the first foreign-affiliated accounting firm’s audit corporation licensed in Japan.

July 1984 Coopers & Lybrand Japan (former Lybrand, Ross Brothers & Montgomery) merges with Chuo Audit Corporation.

July 1998 PricewaterhouseCoopers (PwC) is formed as a result of a worldwide merger of Price Waterhouse and Coopers & Lybrand.

April 2000 Aoyama Audit Corporation and Chuo Audit Corporation merge to form ChuoAoyama Audit Corporation.

October 2002 PwC sells its management consulting service (MCS) unit to IBM.

June 2006 PricewaterhouseCoopers Aarata is established as a PwC member firm.

May 2009 BearingPoint Japan is acquired and renamed PricewaterhouseCoopers Consultants Co., Ltd.

October 2009 PricewaterhouseCoopers Research Institute (Japan) Co., Ltd. is established.

January 2010 PwC Advisory and PricewaterhouseCoopers Consultants undergo business integration and become PricewaterhouseCoopers Co., Ltd. PricewaterhouseCoopers HRS is integrated into PricewaterhouseCoopers Co., Ltd. PwC Japan, a new framework, is established.

1850s

1840s

1940s

1960s

1980s

1990s

2000s

2010s

June 1999 PwC FAS Co., Ltd. is established (subsequently PwC Advisory).

July 1999 Price Waterhouse Tax Office and Chuo Coopers & Lybrand International Tax Office merge to form PricewaterhouseCoopers Tax Office (subsequently Zeirishi-Hojin PricewaterhouseCoopers).


Throughout the world, all members of PwC’s staff share the PwC Experience.

The PwC Experience has two aspects: the Client Experience and the PwC Staff and Team Experience.

Four Principles of Behavior— Heart of the PwC Experience

Client ExperienceWe observe four principles of behavior in our work. 1) We invest in client relationships. 2) We share and collaborate. 3) We put ourselves in our clients’ shoes. 4) We are focused on client value.

Whenever clients work with us, we want them to relish the experience and be eager to repeat it. This is what the Client Experience is all about.

PwC Staff and Team ExperienceWe observe four principles of behavior in our work. 1) We invest in team relationships. 2) We share and collaborate. 3) We put ourselves in each other’s shoes. 4) We are focused on enhancing the

value of our people.

By contributing and sharing knowledge and information and providing high-quality client services,

all our staff and teams are able to enhance their professional skills while realizing their full potential as individuals. This is what the Staff and Team Experience is all about.

Virtuous Circle Uniting Clients and Staff in a Positive Experience

The PwC Experience is the realization of our commitment to always putting clients and staff first.

PwC staff grow and flourish through the successes of their clients. Positive experiences in working with PwC reinforce client trust in the firm,

fostering client confidence in the professionalism of every member of the PwC staff. By accumulating positive experiences together with clients, our people enrich their skills and their ability to deliver services of progressively higher quality.

We want our clients to relish the PwC Experience. That is why we inculcate the values implicit in the PwC Experience through training and personnel evaluation so that every member of the PwC staff lives and breathes the PwC Experience in everything they do.

Akafuku Co., Ltd.

PwC— steadfast partner for regional enterprisesSony Corporation

PwC’s audit approach enables Sony to respond swiftly to changing circumstances

For more than three centuries, Akafuku has been a family business producing and selling Akafuku mochi, a famous Ise confection. In my day-to-day management of the company, I have a powerful sense that the values of family businesses are being put to the test.

Although family businesses tend to have strengths, notably adherence to a company vision handed down from one generation to the next, that non-family businesses may lack, they are also prone to weaknesses. Looking back on the state of our business a few years ago, it’s clear that we faced many issues—resistance to change on the part of employees, rigidity within the company, and failure to share techniques and skills.

Since, as a regional enterprise, we lacked the human resources available to large companies, and were unable to gather all the information we needed, we sought the support of PwC Japan’s advisory group. Even as we harnessed our strengths to become a more open, more powerful company, we set out to overcome

weaknesses that could become an Achilles’ heel. To those caught up in the hurly burly of day-to-day operations, the critical issues confronting a company are difficult to discern. But the professionals from PwC Japan were able to grasp the reality. After organizing and analyzing the incomplete information we provided, they quickly proposed an action plan.

The staff of PwC Japan earned the confidence of our people by courteously listening to what they had to say, skillfully eliciting and absorbing information and opinions. PwC Japan certainly has deep insights into family businesses, and from now on I want to continue this fruitful exchange of opinions with them about issues of particular relevance to our business.

Today, at Akafuku we are shifting to a new participatory style of management involving everyone in the company, instead of the previous top-down approach. I feel that we owe this, too, in large measure to PwC Japan, our steadfast business partner. (From an interview)

Sony operates globally through its network of more than 1,000 subsidiaries. PwC audits the entire Sony Group, including subsidiaries and regional operations. Deploying its global network, PwC promptly and meticulously responds to problems wherever and whenever they occur.

Because PwC’s global audit team is linked to Sony at every organizational level, emerging issues can be swiftly resolved by people from Sony and PwC working together.

Following the introduction of Sarbanes Oxley in the US in 2007, Sony needed to ensure greater rigor in compliance with US standards. Therefore, since 2006 people from PwC US have joined the Sony HQ audit team in Tokyo. Now, with people in close communication on a daily basis, problems are solved quickly.

The Sony-PwC relationship, which goes back some fifty years, started when Sony became the first Japanese company to issue ADR stock and needed a consolidated audit. A person who was involved in the ADR issue at Sony all those years ago told me how impressed he and his colleagues were by the consummate professionalism of PwC. I am grateful to PwC for serving us through deployment of its global network and wealth of experience.

Going forward, I would like to see PwC impose more effective cost controls while maintaining the excellent quality of its services. I would also like PwC to adeptly manage communication, which tends to become unwieldy when teams become bigger. (From an interview)

Noriyasu Hamada

PresidentAkafuku Co., Ltd.Noriyasu Hamada, president of Akafuku, a confectionery company established in Ise, Mie Prefecture in 1707, is from the 11th generation of the founding family.

Takemi Nagasaka

Senior Vice President, Corporate Executive Senior General Manager, Accounting Division Sony Corporation

Putting Ourselves in Our Clients’ Shoes


Evolving for the Benefit of Our Clients

“We will support the transformation of the companies of tomorrow and ultimately contribute to shaping the future of Japan.” Inspired by this vision, PwC Japan is focusing on the development of staff whose attributes—international perspective, specialized skills, communication ability, and leadership qualities—are aligned with our clients’ needs for professional services in the coming years.

More than 161,000 people are working for PwC worldwide. Most issues our people encounter are ones that a PwC colleague somewhere in the world has already come across and resolved through innovation and ingenuity. Tapping the wealth of expertise dispersed throughout PwC’s global network requires the right communication skills, including foreign language skills, for effective collaboration with colleagues around the world.

Under a PwC Japan program, many staff are dispatched to overseas offices in more than ten countries, including the US, the United Kingdom, China

Emphasizing Intellectual Flexibility in Personnel Development

and Hong Kong, Singapore, Australia, Germany, and Brazil, to gain practical work experience. They develop foreign language skills as well as overall communication skills, becoming progressively more able to function effectively in a multilingual, international business environment. Many of PwC Japan’s partners are graduates of this program.

At the same time, we welcome many experienced staff from PwC’s overseas offices who come to work with us in Japan. At the PwC English School, the instructors are PwC staff from around the world and instruction focuses on business situations Japanese staff encounter such as meetings with clients and teleconferencing with counterparts at PwC offices around the world. Another program supports language learning by providing staff with financial assistance for tuition at external language schools.

In addition, professionals at PwC Japan receive at least forty hours per year of technical skills training and business skills training to enhance their expertise.

Emphasis on Soft Skills tooIn addition to language skills and technical skills, PwC Japan emphasizes reinforcement of soft skills. We offer various programs to enhance the communication skills required for cultivating constructive relationships with clients and engaging in fruitful negotiations, as well as intellectual flexibility and emotional intelligence.

Another characteristic of personnel development at PwC Japan is the attention we devote to on-the-job coaching to confirm that people have absorbed the training content and are able to apply it.

Eager to ensure our expertise contributes to society, we are active in the provision of educational support for young people who will become the leaders of tomorrow.

From April to September 2010, PwC Japan sponsored and conducted a course at the Keio University Graduate School of Economics on the practical issues confronting Japanese companies and their possible solutions. As part of this program, PwC Japan partners who work on the front line of the business, a Bank of Japan executive, and other professionals gave lectures in English attended by approximately 100 graduate and undergraduate students.

Also, we have invited high school students to our Shiodome office for panel discussions with PwC Japan staff in order to help the students make an informed choice from the career options available to them.

PwC Japan emphasizes diversity in personnel development. As companies globalize, they need to welcome men and women of every ethnic and cultural background who possess diverse skills, abilities, and personal histories. The Women’s Network Circle is one of our initiatives to support the advancement of women. This is a forum where our people share their concerns and problems, evaluate personnel systems such as those for maternity leave and childcare leave, and devote themselves to improving the working environment and enhancing career opportunities for women.

Through these activities, we are developing consummate professionals capable of delivering the services clients need—people who have what it takes to make a difference not only in our own organization, but in society at large.


To earn the trust and meet the expectations of clients, PwC Japan operates a rigorous quality control and risk management framework.

The assurance group, in addition to full compliance with the International Standard on Quality Control (ISQC 1), has independently instituted a layer of safeguards to maintain an even higher level of audit quality. 1) First SafeguardThe Quality Control Department documents quality control policies and procedures, and the lines of service adhere to those policies and procedures.2) Second SafeguardThe Risk Management Group and the Internal Audit Office perform testing and monitoring to confirm that the business is conducted in conformity with the relevant quality control procedures. 3) Third SafeguardThe R&Q Oversight Committee, whose membership includes experts from outside the firm, performs monitoring to ensure that quality control is correctly implemented.

The assurance group uses a system developed by PwC to ensure that our safeguards are working properly.

Our implementation of an independent quality control system, exceeding the requirements of the International Standard on Quality Control, reflects our determination to conduct rigorous audits in Japan, comparable or superior to those conducted overseas.

To deliver high-quality advisory services to clients, it is essential to listen to the voice of the client and provide services individually tailored to the client’s specific needs. Teams are assembled on an individual project basis, drawing on industry and technical specialists as required. Ongoing guidance and reviews by

appropriate personnel enable delivery of services of consistently high quality.

We continually update our technical expertise and industry knowledge and maintain close collaboration with the PwC global network. Furthermore, specialists conduct internal quality control and compliance assessments based on internal standards and perform regular quality checks.

Adherence at all times to the PwC Code of Conduct is a vital part of the PwC Experience. Our partners have quality control measures incorporated into their evaluation systems . We also conduct customer satisfaction surveys and reflect on the findings to further improve our client service capability.

Strict Rules Underpin the One Firm ApproachPwC Japan has established rules which, in principle, prohibit stock trading by staff. These regulations apply not only to members of the assurance group, but also to staff involved with advisory and tax services. Staff must without fail report stocks they have acquired for any reason, and approval is required to sell shares.

Whilst we strive to act as One Firm, where necessary, we maintain the independence of the various businesses to ensure that client confidentiality is not compromised. We are always mindful of quality and risk, and constantly strive to improve service quality and practice risk management.

PwC Japan strives to fulfill its corporate responsibility from four perspectives:

1) Community2) Environment3) People4) Marketplace

We contribute to society through our involvement with communities. Together with banks, securities firms, and other financial institutions, we participate in the FIT (Financial Industry in Tokyo) Charity Run, a charity marathon event. Following the Haitian earthquake in January 2010, we conducted an emergency relief fund drive.

We are reducing paper, electricity, and energy use to help mitigate global warming and protect the environment. Together with PwC

organizations around the world, we participate in Earth Hour, a global warming mitigation event sponsored by the World Wildlife Fund (WWF).

We endeavor to create a working environment where every member of the PwC staff is encouraged to fulfill their potential and experience a sense of accomplishment.

In the marketplace, our aim is to deploy the specialized knowledge and skills we possess as a professional services firm in ways that contribute to the fruitful development of the business community.

PwC strives at all times to conduct corporate responsibility activities adapted to local conditions and which seek to maximize our contribution to the communities we serve.

In December 2009, PwC Japan consolidated the Tokyo head office functions of the assurance and advisory groups, previously dispersed among five locations, to a single office in Shiodome.

Also, for the tax group, based in the Kasumigaseki Building, we have set up a satellite center within the Shiodome office to enable the efficient provision of high-quality services.

Smooth Internal Communication to Support Clients as One FirmWithin the Shiodome office, the assurance and advisory groups practice rigorous information management in accordance with data protection and other regulations. At the same time, there are plenty of spaces where people from different organizations can gather for

discussion and meetings. In this way, we are creating a working environment conducive to smooth internal communication to bring the One Firm approach of PwC Japan into full play.

We eliminated individual desks for staff in the new offices, reducing the floor area per person to less than half that at our previous offices. This new office configuration was prompted by our belief that staff should spend as much time as possible with their clients, listening to their needs and aspirations, and responding promptly.

Our new premises have enhanced staff productivity and enabled us to improve our responsiveness to clients.

Rigorous Quality Control and Risk Management

Contributing to the Community

Our Working Environment

A Layer of Safeguards to Ensure Quality

An open plan office

Quality of Work

(Full compliance with the International

Standard on Quality Control)

Design and operation of internal controls for quality control

First Safeguard

Checking by the risk management group and the Internal Audit O�ce

Second Safeguard

Checking by an oversight committee including experts from outside the firm

Third Safeguard


PwC Japan seeks to make an active contribution to the development of business management and capital markets by publicizing its views and recommendations, reflecting research and analyses of financial and capital markets.

In October 2009, PwC Japan established PricewaterhouseCoopers Research Institute (Japan) Co., Ltd. (PwC Soken). Making full use of PwC’s global network, PwC Soken’s mission is to express views and make recommendations on the major issues facing financial and capital markets both in Japan and overseas.

The Aarata Institute, established in July 2007 as part of PricewaterhouseCoopers Aarata, conducts research from a medium- to long-term perspective on fundamental socioeconomic trends likely to have an impact on auditing services in the future.

PublicationsPwC publishes research conducted in Japan and overseas. Here is a selection of recent reports.

Asia-Pacific M&A Bulletin Year-end 2009—Leading the global economyReport on the economic environment, M&A trends, and market prospects in

14 Asia-Pacific countries and regions. 13th Annual Global CEO Survey

Report on PwC’s survey of the views of CEOs around the world on business prospects and employment trends. The findings were presented at the World Economic Forum in Davos.

Cities of OpportunityReport ranking 21 leading cities around the world in terms of livability, using 10 indicators and 58 key variables.

Seminars and SymposiaPwC Japan holds numerous events, including seminars and symposia. Characterized by lively exchanges of views among speakers and participants, these are valuable opportunities for PwC Japan to share experiences with the business community.

In January 2010 we organized “Financial Services in the Era of Asia - The Role of Finance in Supporting Sustainable Growth of the Asian Economy” (hosted by PwC Soken), a forum for discussion of trends shaping the Asian economy and the path the Japanese economy should pursue.

In a keynote speech, Hirofumi Gomi, chairman of PwC Soken, pointed to gaps in the regulation of financial institutions and a lack of self-discipline on the part of market participants as factors contributing to the financial crisis. He stressed the need to fill regulatory gaps to prevent a recurrence.

Mr. Gomi said: “Excessive regulation prohibiting certain types of transactions across the board is undesirable because it would hamper financial innovation and sap the vitality of the overall economy. No matter what sort of regulatory prohibitions are imposed, gaps will exist.” Based on this recognition, he expressed the view that increasing the transparency of transactions is an essential step in progressing the effectiveness of regulation.

Expressing a Point of View

Hirofumi Gomi, chairman of PwC Research Institute (Japan) Co., Ltd, with staff of PwC Japan

Facts &

Figures

Revenues

60

0

20

10

30

40

50

37

47 49

¥59billion

2009 2010

(Billions of yen)

PricewaterhouseCoopers Aarata

PricewaterhouseCoopers Co., Ltd.

Data is presented on an accounting period basis (from July 1 to June 30 of the following year).


2007 2008 (Year)

Number of people

3094

0

2000

1000

3000

4000

2009 2010

3982(People)

2422

1794

2007 2008




(Year)

Percentage of revenues by industry sector

Resources, services,healthcare & government

Technology, information,communications & entertainment

Financial services

Consumer & industrial products

¥59 billion

2010

47.5％

34.2

8.69.7


Revenues US$26,569 million

154 countries 766 cities 161,718 people

Asiaand Oceania

4,228 million

39,075

Europe,Middle East,

and Africa

12,611 million

74,572

Americas

9,730 million

48,071No. of people

RevenuesUS$

China 39

South Korea 30

India 1

Indonesia 2

Malaysia 4

Taiwan 12

Singapore 2

Philippines 3Thailand 6

Vietnam 2

Australia 9

Asiaand Oceania

109

36

Europe

Mexico 2

Brazil 2

Canada 6

U.S. 36

Americas

46

Aggregated revenues and the number of people of PwC Global are presented below (as of June 30, 2010).

The numbers of Japanese professionals resident overseas and Japanese-speaking local staff are presented below (as of August 31, 2010). *Manager level or above

A regional total does not necessarily match the total of the number of staff in eachcountry in the region because some staff are assigned to two or more offices.

Te l : +81-3-3546-8650

F a x : +81-3-3546-8738

Website: www.pwc.com/jp/e

Email: [email protected]

Website: www.pwc.com/jp/e/assurance


Tel: Tokyo office +81-3-3546-8450

Nagoya office +81-52-588-3951

Osaka office +81-6-6442-3150

Website: www.pwc.com/jp/e/advisory




Osaka office +81-6-6346-1900

Website: www.pwc.com/jp/e/tax




Osaka office +81-6-7670-0988

Tel: +81-3-3546-8295

PwC’s global network

Offices outside Japan with Japanese-speaking staff *

PwC Japan




PricewaterhouseCoopers Research Institute (Japan)

Co., Ltd.

Contacts

Slovakia 1

Switzerland 1

Czech 2

France 5

Germany 9

Hungary 2

Ireland 2

Netherlands 2

Turkey 2

Ukraine 1

Poland 3

Belgium 3

UK 11

Russia 3

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