Japan, US Accounting Standards Boards in Talks Over IFRS-GAAP Convergence
The Accounting Standards Board of Japan (ASBJ) and the Financial Accounting Standards Board (FASB) have updated one another with the recent developments of their efforts to converge the generally accepted accounting principles (GAAP) and the IFRS.
Representatives of the Accounting Standards Board of Japan (ASBJ) and the Financial Accounting Standards Board (FASB) held a discussion on August 18 and 19, 2011, in Tokyo, Japan, the eleventh in a series of discussions between the two accounting standards boards.
The FASB and the International Accounting Standards Board (IASB) have been actively holding joint meetings with the aim of issuing final standards to improve and converge U.S. GAAP and International Financial Reporting Standards (IFRSs). Additionally, on August 18, the American Institute of Certified Public Accountants has urged the Securities and Exchange Commission to allow U.S. public companies to adopt the IFRS as the commission weighs a possible future framework for incorporating IFRS into the U.S. financial reporting system.
The ASBJ reaffirmed its support for FASB’s and IASB’s move to develop high-quality global accounting standards and is making progress with its projects to achieve convergence between Japanese GAAP and IFRSs, taking into consideration the progress of the joint projects by the FASB and the IASB.
Furthermore, the ASBJ and the FASB exchanged views on financial instruments, revenue recognition, leases, and insurance contracts, undertaken by the FASB and the IASB. The financial instruments included the credit impairment model for financial assets and the classification and measurement of financial assets and financial liabilities; revenue recognition involved the recent deliberations that will lead to the re-exposure draft to be issued in the third quarter of 2011; leases included the recent deliberations that will lead to the re-exposure draft to be issued in the fourth quarter of 2011; and insurance contracts included the accounting for the effects of changes arising from the remeasurement of insurance contract liabilities.
According to representatives of the ASBJ and the FASB, their ongoing discussions are useful in promoting mutual understanding that will contribute to subsequent deliberations at each Board and to the future development of high-quality accounting standards on the significant items to be improved with the IASB.
The ASBJ and the FASB would continue to exchange views on issues faced and potential future concerns.
Ikuo Nishikawa, Chairman of the ASBJ, said: “MoU projects and other joint projects undertaken by the FASB and the IASB are of high interest to Japanese constituents. It was extremely meaningful for us to exchange views on financial instruments, revenue recognition, leases, and insurance contracts with the FASB at a crucial time when the FASB and the IASB are redeliberating issues towards the finalization of common standards.
“We hope our discussions at this meeting serve as effective inputs in the finalization process for each standard. The ASBJ is committed to continue to contribute to the development of high-quality, global accounting standards thorough its activities, including periodic meetings with the FASB.”
Leslie Seidman, Chairman of the FASB, stated, “Our ongoing dialogue with the ASBJ has contributed to a deeper understanding of the issues that both Japan and the United States face in working toward the mutual goal of creating high-quality, comparable accounting standards. As a result of these discussions, I believe we will be able to move closer to achieving that goal.”
The next joint meeting is planned in the first quarter of 2012 in Norwalk, Connecticut.