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1. Introduction
The International Accounting Standards Board (IASB) has been largely responsible for developing a set of financial reporting standards that can be used internationally. The need for convergence[1] of International Financial Reporting Standards (IFRS) has been supported by the assertion that a single set of high-quality accounting standards is an important means, for example, of enhancing the comparability of financial reporting and reducing the cost of its preparation and analysis (Doupnik and Perera, 2012, pp. 92-93). With more than 125 countries currently permitting or requiring IFRS for financial reporting, accounting convergence has become an essential and irrevocable component of globalization.
As a result of this global trend toward convergence, the Business Accounting Council (BAC)[2] of Japan announced on June 30, 2009, its decision to allow the optional adoption of IFRS starting with the March 2010 fiscal year-end for consolidated financial statements of listed companies. Additionally, in 2009, the BAC announced its intentions to issue a decision concerning the mandatory adoption of IFRS in 2012 (BAC, 2009). However, on June 21, 2011, Minister Shozaburo Jimi of the Financial Services Agency (FSA) postponed the decision concerning the mandatory adoption of IFRS for an indefinite time.
Accordingly, the mandatory adoption of IFRS in Japan is likely to be deferred beyond 2015 because at least five to seven years are expected to be needed to prepare the country for this change (Jimi, 2011). The minister's decision was mainly influenced by five factors:
Announcement to postpone the adoption of IFRS in the USA by the Securities and Exchange Commission.
Strong request to postpone the adoption of IFRS in Japan by representatives of 21 leading Japanese companies and the Japanese Chamber of Commerce and Industry.
Resistance of the Japanese Trade Union Confederation ( Rengo ).
The unprecedented earthquake and tsunami on March 11, 2011.
Contextual factors characterizing Japan's institutional environment, such as its economy and legal system (Jimi, 2011).
As Minister Jimi stated, the consideration of social, historical, political and economic factors is important for Japanese policymakers because the accounting system in Japan is quite different from those in Anglo-American countries. These differences have forced the Accounting Standards Board of Japan (ASBJ) to develop a complete set of accounting standards and a conceptual framework and to reconcile these accounting...