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The Japanese Minister for Financial Services mentions deferred timing of mandatory IFRS adoption, reinstates US-GAAP option

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21 Jun 2011

The Japanese Minister for Financial Services, Shozaburo Jimi, has outlined a number of changes in relation to the possible adoption of International Financial Reporting Standards (IFRSs) in Japan.

Japan has not yet made a decision on whether or not to mandatory adopt IFRSs, although voluntary adoption already started in 2010. The Business Accounting Council of Japan, with expanded members, will commence deliberation on the adoption question in later in June 2011.

The key changes announced by the Minister include:

  • Mandatory application of IFRS will not take place from the business year ending March 2015, at the very least, and a sufficient time period of five to seven years will be permitted for preparation if and after mandatory application of IFRSs is decided
  • The currently legislated expiry date of the ability to use US GAAP for disclosure purposes, namely up to the business year ending on or before 31 March 2016, will be removed so that the firms will be able to continue their use of US GAAP beyond that date.

As background to this change, the paper released by the FSA referred to various changes in the environment both in and out of Japan that have taken place since the issuance of the Interim Report in June 2009, including the release of the SEC work plan (February 2010), the announcement of a delay in the convergence programme by the IASB and FASB (April 2011), the US SEC staff report on the so-called 'condorsement' approach to the adoption of IFRS in the United States (May 2011), and domestic Japanese events such as the Great East Japan Earthquake and tsunami.

Click for more information (link to the Japanese Financial Services Agency, also available in Japanese).

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