Japan Board of Audit FY2025 Report: ¥144.6bn Flagged, 2.7x

250 findings worth ¥144.6 billion: fewer findings, but 2.7 times the amount of FY2024

The audit report is the result of a year-long review of how the national government spent its money. Findings fall into three types.

*The total count includes findings without an amount, such as reports to the Diet (7 in FY2025 and 12 in FY2024). Cases covered under more than one type are counted once, so the rows do not add up to the total. FY2024 figures are from the summary of results in the FY2024 audit report (in Japanese).

The increase is in "opinions and requests for corrective action", which roughly tripled from the previous year. The four largest findings alone account for 76% of the total amount.

*Amounts are from the Board of Audit's summaries of "opinions and requests for corrective action" and "items already corrected". The total of the four was calculated by this site.

There is also a "background amount", which shows the scale of a problem when no flagged amount can be calculated. For the Regional SME Support Funds, for example, ¥138.92 billion lent to funds whose effects have not been verified is a background amount. Because each background amount is defined differently, they are not included in the ¥144.57 billion.

The ¥144.6 billion is not "the total amount of waste"

The total flagged amount is sometimes described as "the total amount of waste". In its overview, the Board of Audit explains that it does not use the word "waste" because its findings cover many different situations[Board of Audit, overview (in Japanese)]. The flagged amount includes money of very different kinds.

The largest item, ¥67.93 billion for the mutual-aid system, is the amount paid by the end of March 2026. SMRJ planned to launch the new system in August 2025 but postponed it twice, first to September 2026 and then to February 2027. The contract amount grew from the original ¥55.55 billion to ¥96.27 billion, about 1.7 times[Board of Audit, opinions and requests for corrective action (in Japanese)].

The system handles procedures for two schemes. At the end of FY2025, the Small Business Mutual Aid scheme (Shokibo Kigyo Kyosai, a retirement fund for sole proprietors) had about 1.72 million members, and the Business Failure Prevention Mutual Aid scheme (protection against a client's bankruptcy) had about 670,000. The finding concerns how the system was built and what it cost; it does not change how premiums are treated. The scheme itself is explained in Small Business Mutual Aid and tax savings.

The flagged amount therefore includes money that will come back and spending that may still produce results. Even so, spending that keeps growing without results and repayments that are collected late can end up as a burden on taxpayers. It is worth looking at what is inside, not only at the total.

173 of the 211 improper items involved subsidies, grants and cost-sharing payments

When this site sorted the 211 improper items by title and content, 80% concerned subsidies, grants or cost-sharing payments that the national government gave to local governments and businesses.

*Sorted by this site from the counts and amounts of each case in the Board of Audit's "improper items" (checked 10 November 2026). This is not the Board's own classification. The full text of the report (with totals by type) had not been published as of 10 November 2026.

By ministry or body, the Ministry of Health, Labour and Welfare had the most, 67 items, mainly miscalculated grants and cost-sharing payments for National Health Insurance, public assistance and long-term care[Board of Audit, overview (in Japanese)].

Findings close to daily life and work included the following[Board of Audit, improper items (in Japanese)].

In the social insurance example, an employer had not enrolled 9 employees because their working hours were short and their work was not regular. In fact, 5 of the 9 worked in a way that required enrollment. The enrollment conditions for part-timers are covered in the ¥1.06 million and ¥1.3 million walls. Being enrolled also leads to a future employees' pension and to sickness and injury allowance when you take time off due to illness.

All of the tax shortfalls were collected or refunded after the Board pointed them out. At the Kofu Tax Office, an improper item also covered a staff member who pocketed a total of ¥6.06 million in cash received from delinquent taxpayers, on 47 occasions (fully repaid). Last year's under-collection and misconduct by tax officials are covered in National tax scandals 2026. Consumption tax is also slipping through the cracks in tax-free sales to foreign visitors (the problem of buyers who made over ¥100 million in tax-free purchases).

Subsidies produce many improper items because the money passes through several layers: from the state to prefectures, municipalities and businesses. The report repeatedly shows errors by recipients that the state's or prefecture's checks failed to catch. The Board carried out on-site inspections at only 34.1% of key locations, and 20.3% of locations overall. The 173 items are simply what was found within the scope of the audit. Whether Japan has too many subsidies is examined with international comparisons in Does Japan have too many subsidies?

Where the money goes: 80% of FY2024 improper items were corrected by June 2026

For improper items, ministries and agencies recover the money through repayment or collection. Every year, the Board of Audit also checks how far this has progressed[Board of Audit, results of the audit of corrective measures for improper items (in Japanese)].

There are four ways to correct an item. Excess subsidies or benefits and unpaid taxes are repaid or collected, over-collected taxes are refunded, defective works are repaired, and procedural errors without actual loss are handled with measures to prevent recurrence. Improper items from FY1946 to FY2024 whose correction is not complete still number 336, worth ¥8.49 billion.

The 20 "items already corrected" were fixed by the ministry or agency during the audit. Under the road maintenance subsidy, 88 local governments and other bodies had used subsidies for repairs not in their repair plans, among other issues. The Ministry of Land, Infrastructure, Transport and Tourism revised the program rules in August 2026 and, from October, began requiring repair plans to be submitted with grant applications[Board of Audit, items already corrected (in Japanese)].

The 12 "opinions and requests for corrective action" ask for changes to systems, and the response is tracked in later reports. The ¥67.93 billion for the mutual-aid system is not money that will come back right away. Whether management improves as requested will be checked in next year's report.

Channels and data taxpayers can use: tips to the Board, the audit report database and administrative project reviews

• Sending information to the Board of Audit: if you see something inappropriate or inefficient in a national body or in a project by a local government or organization receiving national subsidies, you can send it by post or through the online form. Be as specific as you can about the ministry or local government, the project name, the year, the amount and what happened. There is no reply, and the Board does not answer questions about individual audits[Board of Audit, receiving information (in Japanese)]
• Local projects go to local audit commissioners: municipal projects with no national money are outside the Board's scope. Contact the office of the local government's audit commissioners
• Audit report database: past audit reports can be searched by municipality or program name, so you can check whether your own local government has been flagged[Board of Audit, audit report database (in Japanese)]
• Administrative project reviews and fund sheets: the budget, recipients and performance targets of each national project, and the balance and spending of each fund, are published. In 2026, the "autumn review", in which outside experts publicly examine selected projects, takes place on 12 and 13 November[Cabinet Secretariat, autumn review (in Japanese)]

For businesses that receive subsidies, typical findings are placing orders before the grant decision, overlap with other subsidies, and selling purchased equipment without permission. Even after receiving the money, you are required not to dispose of the equipment for a set period. Subsidies your business may qualify for can be found in the subsidy database.

Summary

• The FY2025 audit report has 250 findings worth ¥144.57 billion, about 2.7 times FY2024 (¥54.08 billion)
• Most of the increase comes from the top four findings (¥109.3 billion in total); the largest is ¥67.9 billion for the mutual-aid system rebuild
• The Board of Audit does not call the flagged amount "the total amount of waste"; it mixes under-collection, receivables, spending without results and more
• 173 of the 211 improper items (82%) involved subsidies, grants or cost-sharing payments; the Ministry of Health, Labour and Welfare had the most, with 67
• Of the 271 FY2024 improper items, 223 had been corrected through repayment or other means by the end of June 2026

References (sources)

• Board of Audit: Overview of the FY2025 audit report / Outline of the audit (in Japanese)
• Board of Audit: Improper items (FY2025 audit report, in Japanese)
• Board of Audit: Opinions and requests for corrective action (same, in Japanese)
• Board of Audit: Items corrected by the authorities based on the Board's findings (same, in Japanese)
• Board of Audit: Results of the audit of corrective measures for improper items (same, in Japanese)
• Board of Audit: Notable cases in the FY2025 audit report (in Japanese)
• Board of Audit: Summary of results in the FY2024 audit report (in Japanese)
• Board of Audit: Receiving information / Audit report database (in Japanese)
• Cabinet Secretariat, Administrative Reform and Efficiency Promotion Office: Autumn review / Fund sheets (in Japanese)

*This article is general information based on materials published by the Board of Audit and the Cabinet Secretariat as of 10 November 2026. The counts by content of the improper items are this site's own classification, not the Board's totals. For individual cases, check with the relevant ministry or local government; for tax and social insurance questions, consult the tax office, pension office, a certified tax accountant or a labor and social security attorney.