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In an effort to accelerate convergence in accordance with the Tokyo Agreement of August 2007, the European Commission made its decision in December 2008 that Japanese GAAP is International Financial Reporting Standards (IFRS) equivalent and will be accepted in the European Union effective January 1, 2009 with the provision that the Accounting Standards Board of Japan (ASBJ) continues its convergence activities. Differences and related Accounting Standards/Exposure Drafts recently released by ASBJ are as follows: |
| Topic |
ASBJ release date |
Effectivedate (fiscal year) |
Remarks |
| Retirement benefits |
July 31, 2008 |
April 1,2009* |
Accounting standard (partially revised) released |
| Inventories |
September 26, 2008 |
April 1,2010 * |
Accounting standard (revised) released |
| Investment property |
November 28, 2008 |
March 31, 2010 * |
Accounting standard and its implementation guidance released |
| Business combinations |
December 26, 2008 |
April 1, 2010 * |
Accounting standard (revised) and its implementation guidance (revised) released |
| R&D costs |
December 26, 2008 |
April 1, 2010 * |
Accounting standard (partially revised) released |
| Segment information |
March 27, 2009 |
April 1,2010 |
Accounting standard (revised) released |
| Accounting changes |
April 10, 2009 |
April 1, 2011 ** |
Exposure draft of Accounting standard and its implementation guidance for accounting changes and error corrections |
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* - early application is permitted
** - early application is partially permitted |
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Also on February 4, 2009, the Business Accounting Council of the Financial Services Agency (FSA) released a draft interim report titled, "Application of IFRS in Japan." In the report, FSA states that certain listed companies with fiscal years ending on and after March 31, 2010 will be permitted to adopt IFRS on a voluntary basis. Companies will be issuing consolidated financial statements based on IFRS. The report also states that the decision on mandatory application of IFRS will made in 2012. However, the timing could change depending upon various factors and status of voluntary application of IFRS. This report will be finalized and released this summer. |
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| IFRS Roadmap for U.S. Issuers |
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The SEC issued its proposed "roadmap" regarding transitioning to IFRS on November 14, 2008. This roadmap sets forth seven conditions, if achieved, which could lead to a mandatory IFRS transition. |
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1. |
Improvements in accounting standards |
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2. |
Accountability and funding of the International Accounting Standards Committee (IASC) Foundation |
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3. |
Improvement in the ability to use XBRL for IFRS reporting |
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4. |
Education and training |
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5. |
Limited early use of IFRS where this would enhance comparability for U.S. investors |
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6. |
Anticipated timing of future rulemaking by the Commission |
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7. |
Implementation of the mandatory use of IFRS |
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a. Large accelerated filers – Fiscal years ending on or after December 15, 2014 |
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b. Accelerated filers – Fiscal years ending on or after December 15, 2015 |
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c. Non-accelerated filers – Fiscal years ending on or after December 15, 2016 |
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However, at a US Senate Committee hearing on the nomination of Mary Schapiro as the new Chairman of the SEC, she indicated that she would not necessarily feel bound by the Roadmap. |
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