Japanese proposals to permit wider voluntary IFRS adoption
27 Aug 2013
The Financial Services Agency of Japan (FSA) has released proposals to amend applicable ordinances to allow the wider voluntary application of International Financial Reporting Standards (IFRS) in consolidated financial statements by Japanese companies. The proposals would implement earlier policy recommendations from Japan's Business Accounting Council (BAC) to ease the eligibility criteria for voluntary IFRS adoption in Japan.
The BAC met in June 2013 and recommended the elimination of a number of eligibility criteria for voluntary IFRS adoption. Specifically, the following existing requirements would be removed:
- that an entity shall be a listed company in Japan
- the entity conducts financial and/or business activities internationally.
After finalisation of the proposals, the only remaining hurdle for Japanese entities to voluntarily adopt IFRS would be to establish internal process and systems (including securing capable human resources) to ensure appropriate IFRS reporting, with such fact being disclosed. In addition, Japanese companies would be permitted to use IFRS in documentation prepared for initial public offerings (IPOs). The proposal also includes measures to make it possible for an entity to commence IFRS reporting from the beginning of any quarter in a financial year.
Comments on the FSA proposals close on 25 September 2013. Click for more information (link to FSA website, currently available in Japanese).
