123 School Work

International Harmonization of Japanese accounting Standards

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  Accounting has been influenced by the legal, political, social and economic variables. Just as nations have different cultures, values and politics they also have different patterns of financial accounting development. In Japan the bureaucracy is the strongest influence on accounting development and effectively controls the profession.
  
  The International Accounting Standards Committee (IASC) was set up to firstly formulate and publish, in the public interest, accounting standards to be observed in the presentation of financial statements and to promote their worldwide acceptance, and secondly to work generally for the improvement and harmonisation of regulations, accounting standards and presentation of financial statement procedures. The lack of conceptual framework for financial statements resulted in diverse accounting principles or the free choice of accounting treatment. To combat this, the range of acceptable accounting treatments for similar transactions and events was narrowed to improve comparability by the removal of free choices of accounting treatment. The Business Accounting Deliberation Committee (BADC), the standards-setting body in Japan, pursued a policy of harmonisation with the International Accounting Standards. (IASs) The Entry of Japanese companies on to the New York Stock Exchange and the entry of foreign companies onto the Tokyo Stock Exchange stimulated the Ministry of Finance into introducing consolidated financial statements and eventually consolidated financial statements became a requirement. The BADC issued ' Opinion on interim Financial Statements Included in Semi-Annual Reports' in order to supplement the Business Accounting Principles and, in effect, the process of multiplication of accounting standards began in Japan.
  
  The involvement of Japan as the world's second biggest economy is of vital importance if international harmonisation of accounting standards is to succeed...