Outline of Audits on Establishment and Implementation of JBATA's Framework

July 14, 2020

General Incorporated Association JBA TIBOR Administration

Article 23 of JBA TIBOR Operational Rules ("Rules") requires that, on an annual basis, in principle, the JBA TIBOR Administration (JBATA) shall be subject to internal and external audits on "the execution of the JBA TIBOR calculation and publication operations, establishment and implementation of processes/procedures and frameworks required under the Rules and the review of the JBA TIBOR administration framework (including reviewing the definitions and calculation methods)".

Internal audit by the Internal Audit Office and the assurance engagement[1] for the Directors' Report on IOSCO Principles Compliance Framework as external audit by Ernst & Young ShinNihon LLC were recently performed. We hereby report the overview of internal and external audits.

　

1. FY 2019 Internal Audit

(1) Auditors: JBA TIBOR Internal Audit Office

(2) Effective date: October 1, 2019

(3) Audit subjects: Governance framework, Benchmark design, Establishment of benchmark calculation methodology, Framework for accountability

(4) Audit result: Although no improvement orders were identified, two findings were identified as improvement requirements, related to the development of operational risk management systems which is closely related to reviewing process, and business proficiency including the sharing of business continuity plans with outsourcer. In addition, a finding related to the management of outsourcer was identified. In FY 2020, follow-up will be conducted on the status of improvements.

2. FY 2019 External Audit

(1) Practitioner: Ernst & Young ShinNihon LLC

(2) Effective date: March 31, 2020

(3) Audit scope: Directors' Report on IOSCO Principles Compliance Framework[2][3]

(4) Applicable standard: Practical Guidelines for Assurance Engagements 3000 "Practical Guidelines for Assurance Engagements Other than Audits or Reviews" issued by The Japanese Institute of Certified Public Accountants ("JICPA")

JBATA will seek to maintain and enhance the credibility and transparency of JBA TIBOR, JBATA is going to sophisticate and strengthen the administration framework of JBA TIBOR so that JBA TIBOR continues to be recognized internationally as a benchmark that confirms to the IOSCO Principles, and continues to be used widely as a representative benchmark for the Japanese Yen interest rates.

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