Business Accounting Council of Japan moves forward with its discussion over IFRS
Mar 01, 2012
Following on from the meeting in December 2011, the Business Accounting Council of Japan (BAC) met twice in February to continue planned deliberation over the use of IFRSs in Japan.
No decisions were made at the sessions, which are summarised below:
Meeting held 17 February 2012
During the opening remarks by the Minister for Financial Services, he touched on his meeting with the IASB Chairman which was held earlier in the month in Tokyo. The Minister summarised points communicated to the Chairman as:
- Japan’s firm intent to contribute to the IASB’s activities
- the importance of the standard setter listening to voices in the country
- the need to avoid negative impacts on the economy, while acknowledging international convergence of accounting standards is important.
Afterwards, participants were briefed on the final report of the Trustee’s strategy review 2011 issued 9 February by the IFRS Foundation.
The BAC also reviewed the results of international research visits conducted by the BAC members during November and December 2011. The research was primarily conducted by face-to-face interviews of approximately 40 organisations in 7 countries across 3 continents, consisting of regulators/standard-setters, preparers, users, and auditors. The research topics included 1) local financial reporting system and IFRS, 2) experience of and/or views on using IFRS, 3) impact of IFRS on business activities, and 4) local standard setting and its relationship with the IASB. The full report (in Japanese) is available as a part of the meeting handout.
Meeting held 29 February 2012
Following up on opening remarks by the Minister, representatives from Keidanren (Japanese Business Federation) reported the results of a survey on the use of IFRS it conducted in September 2011, covering certain of its member preparers and business organisations. The survey captured the following themes (among others):
- The country’s overall direction on IFRS is to be clearly envisioned by the end of 2012, while there is a need for monitoring developments in US and cautious deliberation
- Retention and enhancement of influence by the country over the international standard setter is important
- There is wider support for the use of IFRS to be limited to consolidated financial statements, while there are divergent views with regard to the mechanism of incorporating IFRS such as by voluntary adoption vs. mandatory adoption and the scope of companies using IFRS.
The BAC then discussed "impact of principle-based accounting standards&quoot;, which is the sixth topic out of 11 'specific aspects' proposed by the Financial Services Agency (FSA) for deliberation in August 2011. Members expressed various views on and around the topic, such as a need for further technical accounting guidance, preparer protection for non-compliance without intent/fault, concern over comparability, multiple international and local mechanisms to facilitate using such standards including cooperation with the IASB and active communication/discussions among stakeholders, departure from IFRSs requirements, judicial implications, and guidance on accounting judgement in the CIFiR report.
The timing of the next BAC meeting is to be posted to the FSA’s website in due course.
- 17 February Meeting handout (in Japanese, link to FSA website)
- Official minutes of the December meeting (in Japanese, link to FSA website)
The 29 February Meeting handout is expected to be posted to the FSA website in due course.