The ASBJ and the IASB announce Tokyo Agreement on achieving convergence of accounting standards by 2011
08 August 2007
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Ikuo Nishikawa, Chairman of the Accounting Standards Board of Japan (ASBJ), and Sir David Tweedie, Chairman of the International Accounting Standards Board (IASB), jointly announced today an agreement (known as the Tokyo Agreement) to accelerate convergence between Japanese GAAP and International Financial Reporting Standards (IFRSs), a process that was started in March 2005.
As part of the agreement the two boards will seek to eliminate by 2008 major differences between Japanese GAAP and IFRSs (as defined by the July 2005 CESR assessment of equivalence), with the remaining differences being removed on or before 30 June 2011. Whilst the target date of 2011 does not apply to any major new IFRSs now being developed that will become effective after 2011, both boards will work closely to ensure the acceptance of the international approach in Japan when new standards become effective (see the attached copy of the agreement).
Commenting on the agreement, Mr Ikuo Nishikawa said:
We have reaffirmed our commitment to convergence and are pleased to have an opportunity to increase the significant involvement of the ASBJ and Japan more generally in the international standard-setting process. It is expected that this agreement will enable Japanese companies to publish financial statements prepared under Japanese accounting standards without any remedies continuously in the EU and other capital markets using IFRSs.
Sir David Tweedie said:
We are delighted that the ASBJ, representing the interests of the second largest economy in the world, has agreed to accelerate convergence between Japanese GAAP and IFRSs and look forward to its active participation in shaping the future direction of international financial reporting standards.
Press enquiries:
Mark Byatt, Director of Corporate Communications, IASB, telephone: +44 (0)20 7246 6472, email: mbyatt@iasb.org
Sonja Horn, Communications Adviser, IASB telephone: +44 (0)20 7246 6463, email: shorn@iasb.org
Notes to Editors
About the IASB
The International Accounting Standards Board (IASB) began operations in 2001. To fund the operations of the IASB contributions are collected by its Trustees, the IASC Foundation, from the major accounting firms, private financial institutions and industrial companies throughout the world, central and development banks, and other international and professional organisations.
The 14 Board members (12 of whom are full-time) are drawn from nine countries and have wide international experience and a variety of functional backgrounds. The IASB is committed to developing, in the public interest, a single set of high quality, global accounting standards that require transparent and comparable information in general purpose financial statements. In pursuit of this objective, the IASB co-operates with national accounting standard-setters to achieve convergence in accounting standards around the world.
About the ASBJ
The Accounting Standards Board of Japan (ASBJ) was established in July 2001 as a private sector organisation. Accounting standards developed by the ASBJ are to be authorised by the Financial Services Agency as part of generally accepted accounting principles (GAAP). The ASBJ develops accounting standards and implementation guidance that appropriately reflect the environment in which business enterprises operate. The ASBJ also communicates with corresponding organisations abroad and contributes to the development of global accounting standards. For more information about the ASBJ, visit the Website at https://www.asb.or.jp/asb/top_e.do
8 August 2007
Accounting Standards Board of Japan
International Accounting Standards Board
Agreement on initiatives to accelerate the convergence of accounting standards
The Accounting Standards Board of Japan (ASBJ) and the International Accounting Standards Board (IASB) share the belief that convergence towards high quality accounting standards will greatly benefit capital markets around the world. They therefore launched a joint project in March 2005 with the final goal of accomplishing convergence between Japanese GAAP and International Financial Reporting Standards (IFRSs). In their discussions in this joint project, the boards have identified differences between the two sets of standards and have made progress towards eliminating those differences.
In the light of the growing acceptance of IFRSs by major economies throughout the world, the ASBJ and the IASB agree that the acceleration of convergence of Japanese GAAP and IFRSs is the strategic priority of their joint convergence efforts. Consistently with this objective, the ASBJ and the IASB have agreed to pursue the strategy outlined below, which includes defined target dates for short-term and longer-term convergence projects. In pursuing this strategy, the ASBJ and IASB recognise the need to consult interested parties, including regulators, and to follow their respective due process requirements for the development of accounting standards.
Completion of short-term convergence projects by 2008
The goal by 2008 is to reach a conclusion that eliminates the differences or provides compatible accounting standards for the items which in July 2005 the Committee of European Securities Regulators (CESR) advised remedies as to the financial statements prepared under Japanese GAAP in connection with the equivalence assessment by the European Commission. Consequently, convergence in major areas of existing Japanese GAAP and IFRSs will be achieved through these projects.
Establishing a 30 June 2011 target date for other convergence topics
The goal by 30 June 2011 is to bring about convergence on the remaining differences between Japanese GAAP and IFRSs that have been identified by the boards, but are not part of the 2008 projects. The target date does not apply to any area of difference on which the IASB now has a major project that will result in a new standard with an effective date after 30 June 2011. However, to achieve the ultimate objective of convergence of Japanese GAAP and IFRSs in these remaining areas, both boards will work closely to ensure the acceptance of the international approach in Japan when new standards become effective.
The ASBJ and the IASB will proceed with the projects expeditiously and steadily in the light of the changing environment surrounding global convergence of accounting standards and will enhance co-operation to facilitate greater input in the international standard-setting process from Japan. For this purpose, in addition to the joint meeting between representatives of the ASBJ and the IASB held semi-annually since 2005, both boards will establish working groups led by directors in order to further discuss the major issues emerging in the development of accounting standards in a practical manner.
The ASBJ and the IASB both recognise the need to undertake these works in a manner that is consistent with their respective established due processes, including consultation with constituents regarding ongoing joint efforts.
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It is expected that this Agreement by the ASBJ and the IASB will contribute to the achievement of global convergence of accounting standards through the efforts and actions of not only both boards but also many concerned parties—including preparers, auditors, investors and regulators.