BAC Report Suggests Amendments in IFRSs in Japan.
Japan’s Business Accounting Council (BAC) listed their consideration regarding the implementation of International Financial Reporting Standards (IFRSs) in Japan. After the meeting on 19th June 2013, BAC came up with the final report on 20th June 2013. The report recommended certain changes which will be followed by Japanese public companies.
In order to promote the use of International Financial Reporting Standards (IFRSs) in Japan, the report insisted on three key policy recommendations. The report is of 9 pages and covers the following points
1. IFRSs ease eligibility
Japan’s Business Accounting Council (BAC) insisted that only one criterion must be kept out of three for the eligibility of the use of International Financial Reporting Standards (IFRSs) in Japan. The deleted criterion is 1) Entity must be public company 2) Entity required to do business internationally. The remaining criteria states that company must enjoy financial statesman in accordance with International Financial Reporting Standards (IFRSs). This aspect will encourage number of entities to use International Financial Reporting Standards (IFRSs).
2. Endorsed IFRSs
Changes are recommended to be made in IFRSs in the process of endorsement. The Accounting Standards Board of Japan (ASBJ) would conduct the new process of endorsement and the changes would be approved by FSA without the influence of designation during the entire process. Moreover, three criteria have been analyzed to endorse individual standard, investors safeguard and public interest. 1) Accounting standard know-how (basics) 2) cost of preparation with the inclusion of benefits and 3) harmony and relationship with related institutions. The report highlights that endorsed standards will not be authorized to use without the approval.
3. Separate financial statement for the disclosure of requirements under GAAP (Japanese)
All companies are required to disclose consolidated financial statements before simplifying the act of financial statements under the Japanese Financial Instruments and Exchange Act. In terms of enhanced disclosure a separate mention must be considered in responding to the decreased level of disclosure, says the report by Japan’s Business Accounting Council (BAC).
Report also considered following with respect to the use of IFRSs
1) New stock price index to be developed
2) Authorization of use of IFRSs must be implemented after the reviews gathered.