INTERNATIONAL ACCOUNTING

• TOPIC : FINANCIAL REPORTING OF JAPAN

PRESENTING BY:

TEJASWINI.M
4TH SEM MCOM(FA)
 Financial reporting
of japan
• Ministry of finance plays a vital role in regulating listed companies

• All the listed companies are required under SEL to file audited
registration documents & annual & semi annual accounting reports
with both stock exchange and ministry of finance

• As far as parent company accounts are concerned the commercial code

accounting and SEL accounts should give the same income and
shareholders equity . Audited by a registered independent CPA rather by
statutory auditor .
Business accounting deliberation council
(BADC)

• BADC IS O STANDARD STAUTORY BODY which is also advisory

body of the securities bureau of the ministry of finance

• It has introduced large number of standards to make Japanese firms

to fall in line with international accounting practices

• All the listed companies have to comply with the standards issued
under the SEL Regulations.
1) Professionalism v/s
statutory control
2)Uniformity v/s flexibility :
3)Secrecy v/s transparency
 Statutory control is more important than professionalism .
 Accounting is regulated by both ministry of justice & ministry of finance .
 Commercial code requires all the companies to produce :
Balance sheet
p/l account
Business report
Proposals regarding profit distribution & reserves
 These documents has to be audited by statutory auditor who need not be a CPA
(certified public accountant)
 Accounting system is more lenient towards uniformity in the sense that rules
have applied in the prescribed ways.
 GAAP principles is codified in many places such as commercial code ,SEL & tax
laws.
 Reporting features in JAPAN is quit different from those of other countries .
 Relatively there is little emphasize on demand for information and transparency.
 Keiretsu members have a variety of formal and informal ways of obtaining
information they require
4) Foreign currency Japanese firm follows IAS-21
translation

5) Valuation of assets  Historical cost is accepted .

a) Tangible assets  Market securities are to be valued either at historical cost or revalues amount that is
same as IAS25.
 Inventory should be valued either at cost or market value which ever is less
 Depreciation : SLM or RBM methods are used . Japanese recognize conflict b/w tax
laws and accounting laws when it comes to additional depreciation as permitted in
the taxation law.
The non economic depreciations shown in the published account as an appropriation of
earnings rather than as an expenses of the period .
 Internally generated goodwill is not capitalized
 Acquired goodwill is capitalized an amortized over its life
 Commercial code set at the maximum limit of 5 years R&D cost to be written off in about 5
years.
b) Intangible assets

6) Segment reporting Until recently .Japanese firms were not required to produce any segmental information ,
information but from 1996 companies have to produce information as required .
THANK YOU