Revised rules issued by the Financial Services Agency of Japan (FSA) aim at enhancing the use of International Financial Reporting Standards (IFRS) in the country.
Under the new rules all Japanese listed companies and those applying for a listing will be able to use IFRS in their consolidated financial statements on a voluntary basis.
Prior to the revision the ability to voluntarily adopt IFRS was restricted to listed Japanese companies with international activities.
This revision will increase the number of companies eligible to adopt IFRS from approximately 600 to 4,000.
The FSA revised rules respond to one of the three key recommendations put forward by the Business Accounting Council (BAC) to facilitate the use of IFRS in Japan.
BAC’s recommendations were published in report last June and in addition to ease the eligibility to use IFRS voluntarily it recommended the introduction of endorsed IFRS and simplification of disclosure requirements in a separate financial statement under Japanese GAAP.
The Accounting Standards Board of Japan has been working with the International Accounting Standards Board since 2005 to achieve convergence of IFRS.
The two organizations signed a memorandum of understanding in 2007 which was superseded by Japan’s membership of the Accounting Standards Advisory Forum in march 2013.