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Article by Tak Ochi: 'Expectation of Japan'

 29 January 2015

By Tak Ochi—IASB member

The article first appeared in KEIRIJOUHOU, the accounting journal issued by Chuokeizaisha. The original version (in Japanese) is available here: 鶯地先生巻頭言 [PDF]

Takatsugu Ochi, IASB memberThere has been a growing expectation of Japan.  I’m not talking about tennis, the Major League or football.  It’s about accounting.  Currently, the development of International Financial Reporting Standards (IFRS) has entered a new stage and, with this movement, the presence of Japan has increased significantly.  The International Accounting Standards Board’s (IASB) previous activities were focused on joint projects with the Financial Accounting Standards Board (FASB), the organisation responsible for setting accounting standards in the US.  As these joint projects are nearing completion, the framework of setting new Standards has been switched to an ‘all-participating-type’, in which countries applying IFRS can participate equally.  With this new style, the contribution from Japan is very remarkable. 

The Accounting Standards Advisory Forum (ASAF), which was launched in April 2013, is one of the symbolic items of all-participating-types of setting Standards.  The ASAF meetings are held four times a year and, as the number of meetings proceeds, its importance in the mechanism of setting IFRS has been increased.  The meetings consist of chairmen from standard-setting organisations from eight countries and four regional bodies.  With the ASAF meetings, tightly focused, in depth discussions have been carried out.  These meetings are held before or after the IASB meetings.  The significant added value of the ASAF meetings is that each participant creates their own agenda papers and makes a presentation and the members of the IASB and the FASB participate in the discussion as the equal, responsible person for standard-setting. Accordingly, this has a different significant meaning from the internal discussion of the IASB.  The content of the discussion in the ASAF meetings is wide and in depth, and very advanced, which is highly influential to the decision making of the IASB.

At such a place, the Accounting Standards Board of Japan (ASBJ) reported the relationship of other comprehensive income and the net income of the Conceptual Framework for Financial Reporting.  Since it obtained a very high evaluation, it will be reflected in the IFRS Conceptual Framework Exposure Draft, which will be published in 2015.  The propriety of the amortisation of goodwill had also been proposed by the ASBJ, EFRAG (European Financial Reporting Advisory Group) and the OIC (the Italian Standards Setter).  This proposal was also seriously discussed at the ASAF meeting.  This discussion will have a big influence on the Post implementation Review of IFRS 3 Business Combinations, which is currently under review.

As I just explained, standard-setting for the IFRS has become an all-participating type in both name and reality.  This is just my personal opinion, but since IFRS was not used at all in Japan before, the attitude seemed to be like an outside observer.  However, Japan, who is promoting the expansion of the voluntary application of IFRS and who is one of the countries that actually uses IFRS, has begun participating in standard-setting with its feet on ground, taking root from practical experiences. 

Currently, Japan is sending four staff to the organisation.  The Asia-Oceania office, which opened in Otemachi, Tokyo in the autumn of 2012, is also trying to enhance its structure with two newly joined full-time staff.  This enhancement of the structure was made possible with the understanding and co-operation from the assignor company.  Although it is not as flashy as being an athlete, it’s the staff who actually make the Standard.  Thus, I hope for further contribution by Japan. 


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