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Japanese standard setters reflect on 10 years of achievement, and the future

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14 Sep 2011

July 2011 marked the tenth anniversary of the establishment of the Japanese Financial Accounting Standards Foundation (FASF) and the Accounting Standards Board of Japan (ASBJ).

The President of the FASF (Toshitaka Hagiwara) and Chairman of the ASBJ (Ikuo Nishikawa) have both written articles to commemorate the anniversary, in which they provide an assessment of the past achievements of the organisations, and commentary on the challenges going forward, including Japan's possible adoption of IFRSs.

The retrospectives discuss Japan's convergence projects, the 'Tokyo Agreement' with the AASB, liaison with the IASB and FASB, role in establishing the Asian-Oceanian Standard-Setters Group (AOSSG), and other topics.

Toshitaka Hagiwara (FASF President) made the following remarks (ASBJ translation):

Although the current Japanese economic situation is severe, the accounting system as an infrastructure of the capital market is about to face a major turning point. The [Financial Services Agency] is deliberating the use of IFRSs in Japan and its outcome will have potentially significant effects both domestically and globally. This is an issue that our constituents need to collectively deal with in order to enhance global competitiveness of Japan.

Ikuo Nishikawa (ASBJ Chairman) commented as follows (ASBJ translation):

Given the current situation of the ongoing discussions on the use of IFRSs, the primary issue would be how to proceed with convergence of Japanese GAAP with IFRSs... If Japan wants to have the Japanese views incorporated into the IFRSs based on the consideration of what are the issues in implementing IFRSs, an approach that starts with converging Japanese GAAP with the IFRS would not suit such a purpose. To this end, we need to fully understand global trends, properly analyze the information, specify the issues to be delivered from Japan and then raise those issues to the IASB at an appropriate time. Success at the international negotiation table depends on strong support by domestic constituents.

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