Japans Financial Services Authority has decided to permit voluntary domestic use of International Financial Reporting Standards, putting added pressure on the U.S. to follow suit.
After the U.S., Japan has remained the last major economy not to adopt, or commit to adopting, IFRS. The Japanese FSA is establishing an operational framework for the voluntary application of IFRS in Japan, starting with the fiscal year ending on or after March 31, 2010. The changes also end, for fiscal years ending after March 31, 2010, the option for some Japanese-listed companies to submit their consolidated financial statements according to U.S. GAAP.
Japans Business Accounting Council, which serves as an advisory group to the FSA commissioner, released a roadmap in June for IFRS adoption. The BAC proposed allowing an early voluntary adoption of IFRS by listed companies in Japan, followed by a decision in 2012 on whether to make adoption mandatory starting in 2015 or 2016.
The FSAs decision to permit domestic use of IFRS represents a first step towards a mandatory use of IFRS in Japan, and is an important milestone on the path towards global standards, said International Accounting Standards Board Chairman Sir David Tweedie in a statement. The decision is also a recognition of the successful cooperation between the IASB and the Accounting Standards Board of Japan. This decision should provide encouragement to other countries on the path to embracing global standards.
In the U.S., the Securities and Exchange Commission has not yet voted on approving the roadmap to IFRS that was proposed late last year under outgoing chairman Christopher Cox. That roadmap would have included a vote in 2011 on whether to adopt IFRS starting in 2014. His successor, Mary Schapiro, has been more cautious in her approach to the roadmap, although she has joined in statements by the G-20 leaders advocating the goal of a single set of high-quality accounting standards by June 2011.
On Monday, SEC Commissioner Elisse Walter told attendees at an AICPA conference that she expects the SEC to consider further action [on the roadmap] sometime in early 2010. In the meantime, the IASB and its U.S. counterpart, the Financial Accounting Standards Board, have accelerated their efforts at converging IFRS and U.S. GAAP. The two boards have resolved to meet on a monthly basis, in person and via video conference, to resolve most of the major outstanding differences by June 2011.
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