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Business Accounting Council of Japan discusses IFRS

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02 Jul 2011

Following on from remarks made by the Minister for Financial Services of Japan in June, the Business Accounting Council of Japan (BAC) has resumed discussions on the possible adoption of IFRSs in Japan.

In a two-hour meeting held on 30 June 2011, neither a clear consensus or a definite future plan were established.

In his opening remarks, the Minister mentioned the following points, supplementing what he stated previously on 21 June:

  • The importance of internationalisation of accounting standards should not be denied. The Japanese Financial Services Agency (FSA) continues maximum effort toward harmonising accounting standards internationally
  • On the other hand, such harmonisation is not necessarily the only goal and should not slow down the economy. International requirements and activating the economy are both important.

He also repeated his earlier statements, including confirming: 1) a five to seven year transition period will be provided if mandatory adoption of IFRSs is decided, and 2) the existing statutory limit on the use of U.S. GAAP (currently March 2016) will be removed.

The Minister also touched on a future process and matters to be considered by the BAC:

  • It is necessary to develop and execute a comprehensive work plan as well as roundtable sessions on the subject
  • The interim report issued by the BAC in June 2009 (see our previous story) is to be reconsidered fully in light of recent developments in and outside of Japan, in particular:
    • matters listed up as "Issues Concerning the Application of IFRS" in the report
    • the direction of convergence, which is being discussed at the BAC, rather than by the Accounting Standards Board of Japan (ASBJ)
    • the relationship between consolidated financial statements and separate financial statements
    • institutional matters, including a vision with regard to a variety of capital markets and the abolition of separate financial statements from Japan's disclosure system.

After the remarks, newly expanded members of the BAC, consisted of approximately 40 people, expressed their views, in the presence of the Minister. Fairly diverse views were presented on many different subjects such as IFRS itself and its use in Japan, due process to be followed in deliberation/decision, a necessary period of conversion, and perception of this process by other countries and constituents of the IASB.

The next session of the BAC and the agenda is yet to be scheduled. Click for a transcript of the opening remarks by the Minister (link to the FSA site, in Japanese only).

Click for our earlier story on remarks by the Minister for Financial Services of Japan.

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