Proceedings

250 Japanese companies are listed on EU exchanges, using Japanese GAAP, whereas
approximately 10 companies from IFRS countries are listed in Japan.
The road towards the adoption of IFRS has started in October 2000 when an advisory
body of the Ministry of Finance (Business Accounting Deliberation Council - BADC)
decided to make Japanese GAAP more compatible with IAS. However, in 2001, a
newly created organization was entrusted with the accounting standard setting
function - ASBJ - and an oversight foundation similar to IASB Foundation was
created as well - Financial Accounting Standards Foundation (FASF).
Four years later, ASBJ and IASB launched a joint convergence project between
Japanese GAAP and IFRS. In addition, the Committee of European Securities
Regulators (CESR) completed its review on the equivalence of Japanese, American
and Canadian GAAPs with IFRS and recommended the European Commission to
declare the three sets of GAAP equivalent to IFRS, subject to limited changes, which
were considered significant by CESR. As a response to the CESR report, in October
2006, the ASBJ released its “Project Plan Concerning the Development of Japanese
Accounting Standards”, which identified 26 accounting issues to address in order for
the EU to permit Japanese companies to trade on European securities markets.
In 2007, with the signing of the "Tokyo Agreement", ASBJ and the IASB laid out
short term convergence projects to be completed by 2011. As part of the agreement
the two boards will seek to eliminate by 2008 major differences between Japanese
GAAP and IFRS (as defined by the July 2005 CESR assessment of equivalence), with
the remaining differences being removed on or before 30 June 2011. As a
consequence, revisions were made to Japanese GAAP and at the end of 2008; the EC
established that Japanese GAAP are “equivalent” to IFRS.
BADC
decides on
compatibility
with IAS
2000
2001
ASBJ is
founded
Figure 3. Timeline of IFRS adoption in Japan
ASBJ +
IASB
launched
joint
convergence
project (CP)
2005
2006
ASBJ
released
JGAAP
development
plan with IAS
Tokyo
Agreement
2007
On 11 December 2009, the Financial Services Authority of Japan (FSA) issued an
order allowing certain listed domestic companies voluntarily to start using
“designated IFRSs” in their consolidated financial statements starting from the fiscal
year ending 31 March 2010. The “designated IFRSs” are all approved by the FSA and
the list includes all IFRS and Interpretations issued before 30 June 2009. Those
companies not choosing to adopt “designated IFRSs”, must use Japanese GAAP. The
domestic companies using US GAAP must cease to do so after 31 March 2016.
~ 949 ~
2008
EU announces
JGAAP
equivalence
FSA allows
voluntarily
use of
“designate
d IFRSs”
2009
CPs
2010
2011
CPs
???
2012
FSA decision
on the
mandatory
adoption of
IFRS