Japanese GAAP is moving closer to International Financial Reporting Standards under an agreement that will accelerate the process.

Ikuo Nishikawa, chairman of the Accounting Standards Board of Japan, and Sir David Tweedie, chairman of the International Accounting Standards Board, have signed a deal, known as the Tokyo Agreement, intended to speed up the convergence process.

That process began in March 2005. By 2008, the two boards hope to eliminate the major differences between Japanese GAAP and IFRS, and to remove any remaining differences by June 30, 2011. The boards will work together to ensure the acceptance of the international approach in Japan when new standards go into effect.

The two boards are establishing working groups that will further discuss the major issues in the development of accounting standards. The Committee of European Securities Regulators identified a list of items to address in July 2005, and these will be the initial priority for convergence.

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