Outline of Audits on Establishment and Implementation of JBATA's Framework
August 13, 2021
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 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 2020 Internal Audit
(1) Auditors: JBA TIBOR Internal Audit Office
(2) Effective date: October 1, 2020
(3) Audit subjects: Governance framework, Benchmark design, Establishment of benchmark calculation methodology, Framework for accountability
(4) Audit result: There were no findings as the Audit result. It was also confirmed that measures had been taken to address issues pointed out in FY 2019, as a result of the follow-up on the status of improvements from last fiscal year.
2. FY 2020 External Audit
(1) Practitioner: Ernst & Young ShinNihon LLC
(2) Effective date: March 31, 2021
(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 transparency, robustness and reliability of the JBA TIBOR, and will implement measures so that the JBA TIBOR will continue to be internationally recognized as the benchmark that is compliant with the IOSCO Principles and to be widely used as one of the major JPY interest rate benchmarks.
 The assurance engagements refer to those defined in I.4.(35) of the "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. These assurance engagements have limitations because the procedures are performed by sample based testing and internal control system involves inherent limitations. This assurance engagement was
performed for establishment and implementation of JBATA's Framework as at March 31, 2021. Accordingly, JBATA had not received any opinion on the representation
of the assurance engagement for any other dates.
 In the Directors' Report, Representative Director(Chairman) of the JBATA makes a representation that the JBATA has established and implemented an appropriate framework to comply with the IOSCO Principles as at March 31, 2021.
Regarding IOSCO principle 7 "Data Sufficiency", JBATA has established and implemented an appropriate framework. However, JBATA fully recognize that size of the underlying market of Euroyen TIBOR (Japan Offshore Market) continues to be smaller compared to that of Japanese Yen TIBOR (Japan unsecured call market) and percentage of submission rates determined by actual data of the underlying market is lower compared to that of Japanese Yen TIBOR.
Regarding IOSCO principle 13 " Transition", JBATA has established and implemented an appropriate framework. However, JBATA fully recognize that candidates for JBA TIBOR's alternative benchmarks (the fallback rates) have not been identified.
 Please refer to the "Compliance with IOSCO Principles for Financial Benchmarks (19 Principles)" dated March 29, 2021, for JBATA's compliance with IOSCO Principles.（https://www.jbatibor.or.jp/english/news/Compliance_with_IOSCO_19principles_2021.html）