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ABSTRACT
The Japanese government announced the delay of a road map for IFRS adoption for publicly traded companies due to potential costs to Japanese companies already hard hit from the 2011 earthquake and tsunami (The Accountant 2011). Previously, the Japanese Financial Services Agency (FSA) had stated that it would make it mandatory for Japanese companies to report under IFRS in 2015 or 2016, a time frame that has now been abandoned. In addition, Japan is waiting to see how IFRS adoption plays out in the U.S. and determine if it should take a similar path. However, when adoption of IFRS is reconsidered, Japan's Business Accounting Council (BAC) and Accounting Standards Board of Japan (ASBJ) should consider an adoption of IFRS that is right for Japan. The majority of Japanese companies do not issue consolidated financial statements to the investing public. Accordingly, the optimal application of IFRS in Japan would be to limit IFRS to those companies that publicly issue consolidated financial statements. Those companies that do not issue consolidated financial statements to the public should be excluded from the requirement to report under IFRS.
IFRS ROADMAP IN JAPAN DELAYED
In June, 2009 the International Accounting Standards Board (IASB) announced that Japan's Business Accounting Council (BAC) approved a roadmap for Japan's adoption of International Financial Reporting Standards (IFRS). The BAC in Japan serves as an advisory body to the Commissioner of the Financial Services Agency (FSA), which is ultimately responsible for approving the adoption of IFRS (IASB 2009). Previously, the Japanese Financial Services Agency (FSA) had stated that it would make it mandatory for Japanese companies to report under IFRS in 2015 or 2016.
Soon after, the IASB and the Accounting Standards Board of Japan (ASBJ) reaffirmed their commitment to converging Japanese accounting standards with IFRS: "The boards [IASB and ASBJ], meeting in Tokyo on 6 and 7 June 2011, also announced their intention to deepen their co-operation in preparation for a decision around 2012 on the mandatory application of IFRSs in Japan. Some Japanese domestic companies are already permitted to prepare financial statements in accordance with IFRSs" (ASBJ 2009; IASB 2011).
However, later in 2011 the Japanese government announced, through the FSA, that it was delaying the road map for IFRS adoption for...