Japan
- Japan is included in the IFAD GAAP Convergence Studies
- National Professional Organisation Website: Japanese Institute of Certified Public Accountants
- Standard-Setter Website: Accounting Standards Board of Japan
- Response to IFAC Member Body Survey on Standard Setting and Regulation
- Participant in the Asian-Oceanian Standard-Setters Group (AOSSG)
Financial Reporting Framework in Japan
Listed Companies
On 11 December 2009, the Financial Services Authority of Japan (FSA) published final Cabinet Office Ordinances that allow some Japanese public companies voluntarily to start using IFRSs designated by the Commissioner of the FSA ('Designated IFRSs') in their consolidated financial statements starting from the fiscal year ending 31 March 2010. To be eligible to voluntarily start using IFRSs in 2010, domestic Japanese companies must meet both of (1) and (2) below:
- All of the following requirements shall be met:
- Shares issued by the company are listed on a Securities Exchange in Japan.
- The company discloses in its Annual Securities Reports information regarding specific efforts to ensure appropriateness of its consolidated financial statements.
- The company allocates executives or employees with ample knowledge about Designated IFRSs and has in place a structure that enables it to properly prepare consolidated financial statements in accordance with Designated IFRSs.
- The company, its parent, a related company, or the parent of the related company shall either:
- disclose under laws and regulations of a foreign jurisdiction periodically as required thereby, documents on its business conditions prepared in accordance with IFRSs;
- disclose under rules set by a foreign security exchange markets periodically as required thereby, documents on its business conditions prepared in accordance with IFRSs; or
- own a foreign subsidiary whose capital is equal to or exceeds the equivalent of two billion Japanese yen.
In 2010, the scope of the permitted use of IFRS in consolidated financial statements has further been expanded to include subsidiaries of domestic Japanese companies meeting above criteria.
A company that chooses to apply Designated IFRSs will be required to disclose in the initial fiscal year of such application:
- unaudited condensed consolidated financial statements reported in accordance with Japanese GAAP (for the current and previous fiscal years) and
- an unaudited description of differences between main items prepared in accordance with Designated IFRSs and Japanese GAAP.
In subsequent fiscal years, the company will be required to disclose only the information set out in (2) above.
Japan in the process of considering and deciding mandatory adoption of IFRS by public companies. In June 2011, the minister for financial services mentioned that 1) mandatory adoption would not be required for the fiscal year ending March 31, 2015, and 2) if mandatory adoption is decided, a prearation period of five to seven years will be provided.
Companies that do not voluntarily choose to use Designated IFRSs must use standards issued by the Accounting Standards Board of Japan (Japanese GAAP), with the following exception. Currently, the law allows some Japanese listed companies domestically to submit their consolidated financial statements using US GAAP. About 35 Japanese companies take advantage of this provision. The Cabinet Ordinances adopted in December 2009 that prohibited the use of US GAAP starting in fiscal years ending after 31 March 2016 were revoked in August 2011.
Unlisted Companies
Unlisted companies follow Japanese GAAP.
IFRS Website and Resources in Japanese
Deloitte Touche Tohmatsu LLC (Japan) has created a website with a range of IFRS resources in Japanese. The site includes an IFRS publications page with Japanese language publications including a Japanese version of Deloitte's iGAAP Financial Instruments, with information about how to obtain the publications.
