Accounting Standards (IFRS)
The Financial Accounting Standards Foundation (FASF) was established in Japan in 2001. Under the auspices of the FASF, the Accounting Standards Board of Japan (ASBJ) was formed as a private-sector independent institution responsible for developing and deliberation of accounting standards in Japan. The ASBJ also contributes to the development and improvement of international accounting standards. All accounting standards set by ASBJ are subject to endorsement by the Financial Services Agency (FSA), a Japanese government agency.
For more information about the accounting standards in Japan, please visit ASBJ website, https://www.asb.or.jp/asb/top_e.do
IFRS adoption in Japan
Since 2010, companies that meet certain criteria have been permitted to voluntarily apply IFRS Standards for consolidated financial statements in Japan. In 2013, the FSA revised its Cabinet Office Ordinances and eliminated certain requirements in order to enhance further application of IFRS Standards in Japan. As a result, the number of companies eligible to apply IFRS Standards was increased, and virtually all listed companies and unlisted companies are allowed to use IFRS Standards for consolidated financial statements.
Under the current regulation, a company may voluntarily use IFRS Standards if it meets the following criteria:
- The company discloses, in its Annual Securities Report, information regarding specific efforts to ensure that the consolidated financial statements will be prepared in accordance with ‘Designated IFRS’; and
- The company allocates executives or employees with ample knowledge about Designated IFRS, and puts in place a structure to ensure that the consolidated financial statements will be prepared properly in accordance with Designated IFRS.
‘Designated IFRS’ is a set of IFRS Standards that have been designated by the Commissioner of the FSA. Each IFRS standard is made effective through the formal process of endorsement.
The number of listed companies voluntarily adopting IFRS
According to the Tokyo Stock Exchange, as of June 30, 2016, the number of listed companies voluntarily adopting IFRS Standards (including those that officially announced their intention to adopt) is 115, and an additional 22 companies have disclosed that they are planning to adopt IFRS Standards in their earnings reports. The number of voluntarily adoption IFRS is consistently increasing in Japan.
The JICPA has contributed to the development of high-quality accounting standards by providing comments and inputs to the exposure drafts and other documents issued by both the ASBJ and IASB. The JICPA continues to implement various measures to provide more training and development opportunities for members so that the members will become well prepared for the IFRS implementation.