On topic 1), the Security Analyst Association of Japan (SAAJ) expressed support for IFRSs as an infrastructure for investor-issuer communication in today’s globalised environment on basis of a member survey conducted in June 2010. The SAAJ also explained members’ concerns over certain aspects of standards and setting process, even though they are solvable. It confirmed its preference for IFRSs being used by all public companies in Japan in their consolidated financial statements and suggested a gradual adoption of IFRSs by all public companies over a sufficient period of time as a practical measure. The BAC members responded with various views ranging from support to disagreement. Certain members of the BAC, in particular those representing and/or close to business, are not in full agreement with the SAAJ’s idea of mandatory adoption by all public companies in Japan. They prefer a scoped mandatory adoption and multiple sets of accounting standards available for use.

On topic 2), a bank representative explained potential impacts of IFRsS on loan covenants that are based on reported financial figures such as net assets. He pointed out that banks will have to respond appropriately as there will be a need for contract amendments to certain extent.

In addition to the above two topics, the Financial Services Agency of Japan reported the results of its own survey with regard to the use of IFRS around the world.

The handouts for the meeting (in Japanese only) are available on the FSA website.

The next session, which is expected to cover the rest of topic 2) above and voluntary early adoption situation, is yet to be scheduled. The voluntary early adoption is the last one among the 11 specific aspects to be discussed that were identified in the BAC paper of August 2011.