April 2010

Firms win in early stages of Japan’s IFRS move

From Accountancy Age

As Japan continues its shift over to international financial reporting standards, it is creating a host of challenges and opportunities for firms and their clients at the start of the new fiscal year.

Although Japan’s Financial Services Agency decided in December 2009 that full adoption of IFRS was voluntary, this year, the asset retirement obligations are compulsory from 1 April, 2010, explained Kana Chiba from the IFRS desk at the Japanese Institute of Certified Public Accountants (JICPA).

And this could cause a short-term problem in Japan’s recession-buffeted economy. Leading Japanese business newspaper the Nikkei reported that companies ranging from power generators to retail chains could be facing a ¥300bn ($3.2bn) hit to their balance sheets from new requirements on asset retirement obligations alone.

According to Tomo Sekiguchi from the Accounting Standards Board of Japan (ASBJ) only “one or two companies” have chosen to voluntarily adopt IFRS fully this year, a number that is expected to rise to “ten to 20” next year. The full switchover is expected to be completed by 2013.

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