IPO (Initial Public Offering) Support Services
In preparing for an initial public offering (IPO), you need to complete a huge amount of work involving the entire company, such as building an internal controls system, reviewing accounting policies, and preparing documents for the listing application. These works also require a high level of quality supported by extended expertise and experience. In such a stressful situation, if you receive a guidance that is too formal and aiming only for an ideal figure in a by-the-book manner, it is like being asked to do the impossible task.
We understand the current status, actual conditions, and characteristics of your company, and develop a realistic vision of what your company should be prior to the listing examination. We then identify a process to efficiently realize this vision, and review the process flexibly and elastically in accordance with the progress.
Preliminary investigation and issue management
Develop internal rules and regulations
Introduce internal audits
Implement a profit management system
Implement corporate governance
Implement a business management system
Implement a financial closing system
Prepare listing application documents
Implement labor management system
Preliminary Investigation and Issue Management
When you decide to go public, you may undergo a short review by an auditing firm. The short review report includes an analysis of your corporate environment, issues to be resolved before IPO, and an anticipated IPO schedule.
As a member of the GYOSEI Group, we provide you with support in the enormous and complicated preparation work for listing.
As a member of the GYOSEI Group, we provide you with support in the enormous and complicated preparation work for listing.
Preliminary Investigation (Short Review)
Objectives of the Preliminary Investigation
The preliminary investigation is essential for systematic and efficient listing preparation by identifying all the issues to be resolved before listing and developing an action plan.
Scope of Preliminary Investigation
At the listing examination, you are subject to be strictly examined in terms of the followings, i.e., " sustainability and profitability of the company," "soundness of corporate management," "effectiveness of corporate governance and internal controls," and " appropriate disclosure of corporate profile and other information". In the preliminary investigation, we extensively review whether there is any conflict with above checkpoints.
Preliminary Investigation and IPO Schedule
By developing detailed action plans for the issues identified at the preliminary investigation, you can clarify the time required for resolution and the operational period after resolution, and determine your schedule for listing.
Preparation and Schedule for IPO (table 2)
Resolve Issues Identified in Preliminary Investigation
Extended Expertise and Experience to Resolve Issues
Many of the issues identified in the preliminary investigation require expertise and experience in various areas such as accounting, J-SOX, compliance with accounting audits, etc.. We, GYOSEI CONSULTING provides you with the extended expertise and experience of our own and our network and help you resolve the issues for your successful IPO.
Efficient Preparation for IPO
By utilizing outside professionals with expertise and experience, you can prepare for listing efficiently and quickly, with no rework. Since most of the preparation work needs to be completed within a limited period of time before listing, it is not efficient to cover all of the work with in-house resources.
Implement Management Control System
Introduce Internal Rules and Regulations
Scope of Rules and Regulations to be Developed
Upon listing, you may need to introduce not only a comprehensive rulebook such as basic rules, organization-related rules, accounting-related rules, business management rules, general affairs-related rules, personnel-related rules, and compliance rules, but also detailed regulations and manuals in some cases.
Rules and Regulations and Listing Examination
Upon listing, your corporate management system will be examined to ensure that it is appropriate for a public company. The basis of a corporate internal control is its rules and regulations. It is important not only to have rules and regulations, but also to ensure that they cover every operation of your company and that they are consistent with each other. Even the operational status is subject to examination.
Rules and Regulations and Internal Controls
Listed companies are required to design and operate internal controls, and one of the important evidences is rules and regulations.
In particular, since the approval system is the basis of internal controls, you need to prepare a ledger of internal memo for approval and ensure its comprehensiveness and continuity.
In particular, since the approval system is the basis of internal controls, you need to prepare a ledger of internal memo for approval and ensure its comprehensiveness and continuity.
Steps to Build a System for Internal Control Audits
Introduce Internal Audit
Risk Management and Internal Audit
Monitoring is essential for continuous operation of risk management, and the internal audit is one of the most important systems. By building an internal audit system or strengthening its function, you can achieve corporate governance, prevent and detect fraud at an early stage, and improve the efficiency of business operations.
IPO and Internal Audit
At the listing examination, you are subject to be strictly examined in terms of the followings, i.e., " sustainability and profitability of the company," "soundness of corporate management," "effectiveness of corporate governance and internal controls," and " appropriate disclosure of corporate profile and other information". In order to secure these checkpoints, the internal audit system is considered to be very important in the listing examination.
Implement Profit Management Systems
Accounting information is one of the most important and necessary data for management decision making. For the smooth operation of the PDCA business management cycle, you need to develop a monthly closing system so that you can provide accurate and timely monthly financial data, which is the basis for management decision-making, to the management.
If you have consolidated subsidiaries, you need to develop a system to collect data from the subsidiaries and consolidate their accounts to cope with the PDCA business management cycle on a consolidated basis.
If you have consolidated subsidiaries, you need to develop a system to collect data from the subsidiaries and consolidate their accounts to cope with the PDCA business management cycle on a consolidated basis.
Develop Business Plans / Budget Management Systems / Monthly Closing Systems
Develop Business Plans
Develop Mid-Term Business Plan
In order to avoid falling into passive management, you need to develop a realistic multi-year plan reflecting your corporate business environment and execute various measures to achieve the plan.
Profit Management Cycle (PDCA Cycle)
The measures implemented (Do) can contribute to corporate growth only by measuring the results, evaluating the degree of achievement (Check) in comparison with the plan (Plan), and implementing measures based on the evaluation results (Act).
Revise Mid-term Business Plan (Rolling Method)
In order to adapt to a rapidly changing corporate environment and to ensure the its continuous growth, you need to revise your mid-term business plan every year.
Develop Budget Management System
Develop Comprehensive budget
In order to achieve mid-term business plan, you need to develop a detailed numerical plan that covers the entire corporate activities for the first fiscal year as a budget.
Develop Action Plans
In order to achieve the comprehensive budget, you need to develop specific action plans.
Grasp Actual Results
In order to assess the budget achievement, you need to grasp the actual results, compare and evaluate them with the budget, and if there is a variance between the budget and actual results, you need to consider the causes and countermeasures for the variance.
Implement Monthly Closing
Monthly Closing for Prompt Resolution of Management Issues
Corporate profit plans and budgets are developed based on certain assumptions, and by recognizing and resolving the causes of variances between actual results and budgets as management issues, you can achieve corporate growth and improve business performance. The monthly closing is essential in order to grasp the actual results on a monthly basis.
Monthly Closing for Timely Disclosures
You cannot timely grasp and disclose your business performance only by annual closing. The monthly closing is essential for timely disclosure.
Monthly Closing and Corporate Management Levels
The figures required for monthly closing are not prepared only by the accounting department. Sales from the sales department, purchase from the purchasing department, manufacturing cost from the manufacturing department, salaries and bonuses from the human resources department, and other necessary figures are collected from all departments within your company. If the management level of your company is below a certain level, it is impossible to collect the necessary figures accurately and promptly.
Implement Corporate Governance
Introduce Internal Controls
"The Companies Act stipulates that ""the development of systems necessary to ensure that the execution of the duties by the directors complies with the laws and regulations and the articles of incorporation, and other systems prescribed by Ministry of Justice Order as systems necessary to ensure the properness of operations of a Stock Company."" While the Financial Instruments and Exchange Law (J-SOX) is limited to internal controls related to financial reporting, the Companies Act defines the purpose of internal controls as ensuring the appropriateness of the overall business operations of a stock company.
GYOSEI CONSULTING provides you with support in building an ""internal control system"" required by the Companies Act. "
In addition, we provide support for the followings, which are important points for listing examination.
Establishment of a system to reject anti-social forces
Related party transactions and liquidation of affiliated companies
Implement Business Management Systems
Upon listing, you will be asked whether your company has a corporate governance system and organizational design appropriate for its stage of growth, and whether your company has an organizational and management system and business operations that will ensure "the effectiveness of corporate governance and internal controls"
Implement a Business Management System
J-SOX Compliance
Overall J-SOX Compliance
The internal controls for J-SOX require a broad range of measures, including the determination of the scope of assessment, company-level controls, process level controls, financial controls for the reporting process and IT company level controls.
GYOSEI Consulting helps you design and operate these various internal controls.
Efficient J-SOX Compliance
If J-SOX is implemented without understanding its essence, you tend to take a conservative approach, resulting in additional man-hours. Based on the expertise and knowledge we have accumulated since the introduction of J-SOX, we can efficiently implement the internal controls necessary for listing by utilizing checklists and 3-Point Set creation tools in accordance with the actual situation and needs of your company.
J-SOX Compliance and System Construction
In order to comply with J-SOX, in addition to IT company level control, you may need to construct or modify your existing information systems regarding process level controls. GYOSEI Consulting helps you construct the information systems necessary for your listing.
Implement Accounting System
The construction of an accounting system is not completed with the purchase of an accounting package. Especially when building an accounting system for the entire group, you need to standardize chart of accounts, management meshes, closing procedures, and accounting-related operations. Without considering profit and budget management systems as well, you cannot successfully implement a business management system.
The trouble is, recently, many companies have failed to link sales data with accounting data. It is important to design internal controls prior to implementing an accounting system. In particular, it is highly recommended to utilize API linkage, etc. to avoid information conversion points from internal control points of view.
At GYOSEI CONSULTING, we help you implement not just an accounting system, but also a business management system and an group accounting system.
The trouble is, recently, many companies have failed to link sales data with accounting data. It is important to design internal controls prior to implementing an accounting system. In particular, it is highly recommended to utilize API linkage, etc. to avoid information conversion points from internal control points of view.
At GYOSEI CONSULTING, we help you implement not just an accounting system, but also a business management system and an group accounting system.
Implement a Financial Closing System
Shorten Closing Processes
Stock Listing and Shortening Closing Processes
Listed companies are required by stock exchanges to promptly submit an earnings report in 45 days and to disclose financial results in a timely manner. In addition, delays in closing accounts may be judged to be caused by issues of corporate business management system in the listing examination process.
Disincentive to Shorten Closing Processes
In order to efficiently shorten closing processes, you need to resolve the causes (disincentive) of the delay at a pinpoint, rather than taking random measures. GYOSEI CONSULTING analyze and improve the closing procedures to efficiently and effectively shorten closing processes.
Operational Divisions and Disincentive for Closing
The disincentive for closing accounts does not always exist in the closing procedures themselves. In many cases, the cause of delayed closing lies in the operational divisions such as sales, purchasing, logistics, and production divisions, and it is relatively difficult to solve. We, GYOSEI CONSULTING, help you to achieve to shorten closing period by resolving the disincentive in your entire operational processes.
Standardize Closing Procedures
The listing examination will ask whether a group-wide management system, including affiliated companies, is in place for profit management in order to protect shareholders. For the development of a group-wide management system, it is effective to standardize operations as much as possible to facilitate monitoring by the parent company. In particular, standardization of closing accounts is essential for prompt and appropriate disclosure after listing.
Prepare Consolidated Financial Statements
Since the disclosure of consolidated financial results will be the primary focus after IPO, companies need to prepare consolidated financial statements if they have group companies.
Monthly business performance is to be monitored on a consolidated basis, thus, it is essential to develop procedures for preparing monthly consolidated financial statement at an early stage.
We, GYOSEI CONSULTING, help you to collect information from group companies and to efficiently prepare consolidated financial statements.
Monthly business performance is to be monitored on a consolidated basis, thus, it is essential to develop procedures for preparing monthly consolidated financial statement at an early stage.
We, GYOSEI CONSULTING, help you to collect information from group companies and to efficiently prepare consolidated financial statements.
Develop Group Accounting Policies
When preparing consolidated financial statements, it is necessary to unify the accounting policies adopted by the consolidated group for transactions with the same substance under the same environment.
In case there is a Group company whose accounting procedures are based on tax accounting (mainly corporate tax law, etc.), you need to adopt corporate accounting principles and unify the accounting policies.
In addition, in order to assess the performance of group companies based on the same criteria, you need to develop a group accounting policy at an early stage.
We, GYOSEI CONSULTING help you to develop a group company accounting system and group accounting policies.
In case there is a Group company whose accounting procedures are based on tax accounting (mainly corporate tax law, etc.), you need to adopt corporate accounting principles and unify the accounting policies.
In addition, in order to assess the performance of group companies based on the same criteria, you need to develop a group accounting policy at an early stage.
We, GYOSEI CONSULTING help you to develop a group company accounting system and group accounting policies.
Revenue Recognition Accounting Standards
The "Accounting Standard for Revenue Recognition," which is mandatory for fiscal years beginning on or after April 2021, has many abstract expressions, and its contents include many concepts not included in previous accounting standards, making it very difficult for a company to comply with it on its own. At GYOSEI Consulting, we fully understand your company and help you comply with the Revenue Recognition Accounting Standard as well as the necessary operational, system, and internal control measures.
Inventory Valuation
In some unlisted companies, accounting procedures are based on tax accounting (mainly corporate tax law, etc.). For listing, you need to adopt corporate accounting principles. accounting policies.
Inventories may be valued by the last purchase cost method based on tax accounting, however, companies holding inventories of raw materials, products, goods, etc., i.e., manufacturers, distributors, and so on, are supposed to adopt the perpetual inventory method.
In particular, for proper profit management, inventory control is essential for calculating material costs and is an important element in cost accounting, which may involve system construction.
Therefore, an inventory valuation system including inventory control must be implemented as early as possible.
At GYOSEI Consulting, we help you develop an inventory valuation system based on your inventory management situation and profit management system.
Inventories may be valued by the last purchase cost method based on tax accounting, however, companies holding inventories of raw materials, products, goods, etc., i.e., manufacturers, distributors, and so on, are supposed to adopt the perpetual inventory method.
In particular, for proper profit management, inventory control is essential for calculating material costs and is an important element in cost accounting, which may involve system construction.
Therefore, an inventory valuation system including inventory control must be implemented as early as possible.
At GYOSEI Consulting, we help you develop an inventory valuation system based on your inventory management situation and profit management system.
Cost Accounting System
Stock Listing and Cost Accounting System
At the listing examination, you are subject to be strictly examined in terms of the followings, i.e., " sustainability and profitability of the company," "soundness of corporate management," "effectiveness of corporate governance and internal controls," and " appropriate disclosure of corporate profile and other information". For manufacturers, manufacturing activities are the greatest source of profits. If the cost of products, which is the result of manufacturing activities, is not correctly calculated, it is impossible to evaluate profitability, to ensure soundness, to have an effective internal controls system, and to appropriately disclose the results of those activities. Thus, the valuation of product cost, or cost accounting, is essential for all listing examination items.
Cost Accounting and Peripheral Operations
The basic information required for cost accounting varies broadly, including actual production results, actual and standard production information such as man-hours, material input, and work-in-process, as well as actual budget figures such as labor costs and expenses by department or by process. In addition, it is often difficult to apply textbook cost accounting as it is, and you need to find a compromise that matches your company's actual situation. We, GYOSEI CONSULTING help you develop a cost accounting system necessary and sufficient for listing based on our experience and knowledge of not only cost accounting and cost control itself, but also related production management, purchasing management, inventory management, and other operations and IT.
Cost Accounting and Shortening Closing Period
Since the cost of products is calculated after collecting all the necessary information, it often causes closing delays. We, GYOSEI CONSULTING, we help you to develop a cost accounting system that enables shorter closing and more efficient cost accounting by incorporating planned costs into the cost calculation process or by systemizing cost accounting.
Prepare listing application documents
Prepare Section I and Section II
Preparing the "Annual Securities Report for Initial Public Offering (Part I)" and "Part II of the same (Part II)" (or "Various Explanatory Materials" for the Growth Market) requires a lot of man-hours and expertise. GYOSEI CONSULTING helps you prepare Part I and Part II from both qualitative and quantitative aspects.
Other Documentation
In applying for listing, you need to submit various documents such as a report on corporate governance, business plan and potential for growth (growth market), etc., in addition to Part I and Part II. GYOSEI Consulting helps you prepare the necessary documents for these various applications.
Implement Labor Management System
Labor Due Diligence
Upon listing, the status of labor-related compliance will be examined as part of the corporate governance process. Since it takes time to resolve labor issues, you need to grasp the current status of labor related compliance at early stage. We, GYOSEI CONULTING will conduct a thorough investigation of the status of labor-related compliance.
Improve Working Conditions
In labor improvement consulting for IPOs, it is important not only to deal with the usual labor administration, but also to prepare for the listing examination. We, GYOSEI CONSULTING, help you to resolve labor issues that have been identified.
Develop HR-related Rules and Regulations
The development of HR-related rules and regulations, such as employment regulations, and the development of legal books such as various labor-management agreements and labor condition notices, are most fundamental to labor management, and are important to prevent labor-management problems. We provide support for the development of HR-related rules and regulations in cooperation with a social insurance and labor consulting firm in an alliance relationship.
Labor Advisory
You need to continue appropriate labor management for the listing examination, after the labor improvement consulting is completed. A labor and social insurance consulting firm with an alliance relationship provides accurate advice on day-to-day labor issues as well as on handling questions during listing examinations.
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