The Role of Japan in the Process of Convergence with IFRS - - PowerPoint PPT Presentation

▶
the role of japan in the process of convergence with ifrs
SMART_READER_LITE
LIVE PREVIEW

The Role of Japan in the Process of Convergence with IFRS - - PowerPoint PPT Presentation

Sep 30, 2022 409 likes •598 views

May 11, 2004 ABAC/ PECC Joint Conference The Role of Japan in the Process of Convergence with IFRS Accounting Standards Board of Japan (ASBJ) Vice Chairman Ikuo Nishikawa Accounting Trends around the World European Union Over 7,000 EU

slide-1
SLIDE 1

May 11, 2004 ABAC/ PECC Joint Conference

The Role of Japan in the Process of Convergence with IFRS

Accounting Standards Board of Japan (ASBJ) Vice Chairman

Ikuo Nishikawa

slide-2
SLIDE 2

2

Accounting Trends around the World

European Union

Over 7,000 EU companies will be required to use IFRS from 2005

United States

US GAAP required (both US & non-US companies) Reform of Financial Reporting System

  • Sarbanes-Oxley Act of 2002
  • Norwalk Agreement (2002)

Asia

Currency Crisis (late 1990’s) Moving toward international standards

slide-3
SLIDE 3

3

Accounting Trends in Japan

“Accounting Big Bang” in the late 1990’s –

Moving toward international standards

Along with reform of the financial market in Japan for globalization A set of Japanese accounting standards has been

dramatically improved in quality and substantially converged with IAS/IFRS

For example, Accounting Standards for:

  • Consolidation (based on IAS 27); Financial instruments

(based on IAS 32 & 39); Employee benefits (based on IAS 19); Impairment of assets (based on IAS 36)

slide-4
SLIDE 4

4

Accounting Standards Accepted in Japan

GAAP accepted for listing in stock exchanges in Japan Japanese Company

Japanese GAAP US GAAP (US SEC registrants) (IFRS (under consideration))

Non-Japanese Company GAAP accepted by its own country (US, UK, French -----,IFRS)

slide-5
SLIDE 5

5

Reform of Accounting Standards Setting Process in Japan

ASBJ was established in 2001

Private Sector

  • Previously accounting standards developed by public sector
  • Similar structure to US FASB and IASB

Counterpart to IASB as a Partner Standard Setter

  • IASB was established in 2001 (the successor of IASC)

Supported by constituents

slide-6
SLIDE 6

6

Organization of ASBJ

Board

13 members (including 2 full-time) Bears ultimate responsibility on decisions

Special Committees

International Issues (for IASB agenda) Practical Solutions (for interpretations) Technical Committees (for ASBJ agenda)

slide-7
SLIDE 7

7

Main Objectives of ASBJ

Interaction Japanese GAAP IFRS

Developing Japanese accounting standards Contributing to development of IFRS Interaction improves the quality of both standards. That is the process of “Convergence”.

slide-8
SLIDE 8

8

IASB and Partner Standards Setters

IASB ASB (UK) FASB (US) AcSB (Canada) ASBJ (Japan ) DRSC (Germany) EFRAG (EU) CNC (France ) AASB/FRSB (Australia/ NZ)

slide-9
SLIDE 9

9

International Activities of ASBJ

  • 1. With IASB
  • 2. With Japanese Constituents
slide-10
SLIDE 10

10

  • 1. With IASB (1/2)

ASBJ (Japanese Constituents) IASB Our views

Mission of ASBJ

Contributing to the development of IFRS

IASB Board Member – Japanese “liaison” IISC of ASBJ held monthly to discuss IASB meeting agenda

slide-11
SLIDE 11

11

  • 1. With IASB (2/2)

Conflicts have arisen

Not solved, due to “the Rule of Majority”

Our concern regarding current IASB activities

Biased interpretation of IASB Framework Overweighing to European concerns

Major concerns

Performance Reporting

  • Elimination of Net income ? – Lack of concept

Financial Instruments

  • Macro Hedging? Fair value option?

ASBJ will continue to discuss with IASB to seek solution

slide-12
SLIDE 12

12

  • 2. With Japanese Constituents

(1/2)

ASBJ (Japanese Constituents) International Standards (IFRS,US) International views

Reflect international views in the development of Japanese Accounting Standards

slide-13
SLIDE 13

13

  • 2. With Japanese Constituents

(2/2)

Conflicts have arisen from the context of: Accounting Environment in Japan Commercial Code

  • Both Consolidated and Non-consolidated reporting are

made much of

  • Stability of Accounting Standards is needed

Relevance

Net income

Interpretation

Needs for practical rules

slide-14
SLIDE 14

14

Convergence – Views of ASBJ

Accounting Standards : one of infrastructures of capital markets Convergence is an important goal

IFAD Report “GAAP Convergence 2002”- misunderstanding Capital markets have globalized Accounting standards should be converged in response to the globalization of capital markets The Process of convergence is important

ASBJ continues to contribute to the development of IFRS

slide-15
SLIDE 15

15

Together with APEC economy (1/2)

ASBJ is the only Partner Standards Setter with IASB in Asia

Will establish close relationships with National Standard Setters (NSS) in the APEC economy

3-Countries’ NSS meeting with China and Korea

Held annually Share concerns on accounting issues Communicate with IASB Board member

slide-16
SLIDE 16

16

Together with APEC economy (2/2)

Importance of APEC economy

One of large economy in the world Gather APEC’s views and reflect them in the IASB decision Promote IFRS toward MORE international standards

slide-17
SLIDE 17

May 11, 2004 ABAC/ PECC Joint Conference

The Role of Japan in the Process of Convergence with IFRS

Accounting Standards Board of Japan (ASBJ) Vice Chairman

Ikuo Nishikawa