You are on page 1of 28

Japanese Accounting

System
Students: Tomescu Viorica, Mamaliga Lina
Coordonator: Lector Sup. L. Erhan

Brief introduction to Japanese accounting analysis


In the book "International accounting" Mueller, Gernon and Meek (1994)
World countries classified into four main groups, depending on the peculiarities of
their accounting systems, and Japan have put it together most Continental
European countries in the group.
The Japanese Accounting , aims to present the world with quality research on diverse
themes relating to accounting, thereby helping improve the economic welfare of
societies around the world through better accounting systems.
Apparently, into fact, the legal framework of accounting, Japan deserves place in
this group, but if we look from the perspective of presentation and publication of
financial accounting, Japan closer to the Anglo-Saxon oriented investors and
Decision.

Industrialization was started in Japan in 1868, with the


restoration of the Meiji dynasty. In the period 18901899 appeared first commercial code FrancoGerman inspired, focused on protecting the
interests of creditors and the state as the main
collector of taxes. Until the Second World War the
Japanese economy was controlled by political and
industrial consortia that had a central bank, called
zaibatsu.
After World War II Japan has become one of the major
economic powers. Tokyo Stock Exchange is among
the most important fairs of the world, the
transaction volume in 1994 exceeding three times
that of the London Stock Exchange
For over 30 years, Japan was the second economy in
the world, but the year of 2010 was surpassed by
China, a country with a population ten times higher.

Macro-economic indicators of Japan

GDP

In 2012, Japan
was ranked 3rd
in the world in
the amount of
gross domestic
product by 4.3
trillion $

Milestones in the development and evolution of


Japanese accounting
1890 was adopted Commercial Code of Japan
1948 - adopted a law on the stock exchange and securities ("Securities and Exchange Law");
- Appeared Certified Public Accountants Law ("Certified
Public Accountants Law")
1949 - were issued for Enterprise Financial Accounting
Standards ("Financial Accounting Standards for Business
Enterprises")
- Was established as self-disciplinary association Japanese
Institute of Chartered Accountants - 'The Japanese
Institute of Certified Public Accountants' (JICPA)

1950 - were established regulations regarding the terminology, forms and


methods of preparation of financial statements, audit standards
1960 - began publishing his first professional accounting publications
JICPA (Japanese Institute of Certified Public Accountants)
1963 - became subject to audit financial statements of companies whose
shares were traded over-the-counter (under different conditions than
the stock market)
1965 - were taken to prevent fraudulent financial statements
1967 - audit corporation was founded first, in accordance with the Law of
Certified Public Accountants
1971 - were issued accounting standards for private schools
2003 - amended Law of Certified Public Accountants

Japan has a triangular system of regulation of accounting and


financial reporting. The three basic laws are the Commercial Code, Act
grant and tax law, in addition to longer apply a number of ancillary
regulations.

Report of influence between the three mentioned regulations tend


to change from year to year for FSA and against the Ministry of Justice,
which reorients accounting approach from a legalistic perspective on
economic.

Standardization bodies in Japan


In Japan there are several academic societies Accounting:
1. JAA, 1937 the Japanese Association of Accounting;
2. JCAA, 1975 the Japanese Association of Cost Accounting;
3. Japan Audity Association, 1978 the Japanese Association of Audit;
4. Japan Accounting History Association, 1982 the Japanese
Association for the History of Accounting;
5. Association of Business Analists Japan, the Japanese Association of
Business Analysts;
6. Japanese Association for International Accounting Studies. 1984
Japanese Association for International Accounting Studies;
7. Bookkeeping Japanese Association, 1985, Japanese Accounting
Association;

8. The Japan Society for Social Science of Accounting, 1986,


Japanese Society for Social Accounting;
9. Japan Corporate Social Accounting and Reporting
Association, 1988, the Japanese Association of Social
Accounting and Reporting;
10. Association of Accounting in Mathematics, 1988, the
Association of Accountants in Mathematics;
11. Association of International Studies for Public Sector
Accounting Association for International Studies Public
Sector Accounting;
12. Japan Tax Accounting Association, Japanese Association of
Tax Accounting.

Body advising the Financial Services Agency - Business Accounting


Council - BAC - Japanese normalization is the body of accounting. He
is approached by analogy, the National Accounting Council (CNC) in
France, because most of its members are non-governmental
personalities.
In response the various applications of the Ministry of Finance, BAC
prepares accounting standards, recognized as the "Business
Accounting Principles." All Japanese companies which fall under the
Law stock must meet these standards.
On July 26, 2001, through the joint effort of ten leading institutions in the
private sector of the economy, including JICPA was established
Accounting Standards Foundation (fasf - Financial Accounting
Standards Foundation).
ASBJ (Accounting Standard Board in Japan) was organized under the
auspices fasf as an independent private entity intended to establish
standards in accounting and to establish guidelines for their
application.

Accounting Profession in Japan


Japanese accounting profession exerted relatively little influence
on the financial reporting as compared to the Japanese government or
the Anglo-Saxon countries profession. "Japanese Institute of
Chartered Accountants' (the Japanese Institute of Certified Public
Accountants: JICPA) was established in 1949 as an independent
association, and in 1966 was approved by law (Certified Public
Accountants Law) and has over 21,400 members (15,500 seniors 5,750
juniors and 156 audit firms).
Professional body (JICPA) issue recommendations on accounting issues
that tend, however, be limited to small things. Significant aspects
covered by the accounting principles issued by the BAC.
Since the main objective oversight of the accounting profession as a whole
and maintain a high level of ethics and professionalism, JICPA is
involved in various other activities, such as:

Quality control audits made by members of the body of experts,


including checking the quality of company activities;

Ensuring continuing professional education, including the


organization of courses for junior experts;

Active participation with the Business Accounting Council in the


development of accounting and auditing standards,

Cooperation with other professional bodies;

Active participation in international organizations. JICPA is a


founding member of IFAC (International Financial Accounting
Committee), IASB (International Accounting Standards Board)
and CAPA (Confederation of Asian and Pacific Accountants),
and one of the most important members of the IAASB
(International Auditing and Assurance Standards Board).

In addition to the body of the accounting profession in Japan


working and a Federation of tax advisors, bringing
together representatives of other professions. The services
related to tax or financial advice business, bookkeeping,
preparation of financial statements or tax advice specific
areas (such as inheritance tax).

After 1996, the accounting profession may be exercised by


audit firms (Kansa Hajin) comprising at least five
associates, all auditors. Associations are responsible
indefinitely and solidarity. Very few diploma holders
working outside the profession.

The General Accounting


Generally accepted accounting principles in Japan
(Japanese GAAP) include accounting principles issued
by the BAC (Business Accounting Council), the ASBJ
issued Accounting Standards (Accounting Standard
Board in Japan) and practical guidelines prepared by
JICPA, the professional body of this country.
Accounting Principles are a set of rules that includes a
seven general principles, covering every aspect of
accounting and reporting in the field:
a. fair value;
b. record keeping;
c. the distinction between capital and profits;
d. true and fair view;
e. permanence or continued application methods;
f. consistency;
g. conservatism.

Additional notes materiality principle appears in the


General Principles for business and is not included in
the basic set. However, it is just as important as the
other seven general principles.
The principle of fair value is the most important of the
general principles for businesses. According to him, a
company must provide true and fair view of its
financial conditions and results of operations involved.
The principle of keeping registers specifies that a
company must keep accounting records in a strict
order. In addition, although not directly stated, this
principle implies that all accounting treatment of the
undertaking must be very strict. In this context, the
principle of keeping records involving the same
philosophy as the principle of fair value.

The principle of distinction between capital and profit


mainly refers to the distinction between capital surplus
and profit. In Japan, the emphasis is on profit
distribution to shareholders and authorities. In terms of
income determination that will distribute the distinction
to be made relates in particular to the capital and
undistributed profit to be distributed.
True and fair view principle states that a company must
clearly disclose its financial conditions and results of
operations they undertake, so the information does not
mislead users. This principle applies to the financial
statements of the enterprise as a whole, and
explanatory notes.
On this principle, disclosures regarding accounting
principles and other final trial balance are necessary,
end users can better understand the financial
conditions and results of the undertaking.

Going requires an undertaking not to change its accounting


policies without reasonable grounds. If it changes its policies
must be communicated reasons for such a change.
Conservatism principle, known as the precautionary principle,
require the undertaking to make prudent accounting changes
and estimate the moments when future events will have a
negative impact on its financial situation. On the other hand,
the principle prohibits too conservative estimates.
In Japan, a company often prepare multiple sets of financial
communicated dedicated purposes, including to shareholders,
extension and repayment of loans, payment of taxes. The
principle of consistency require a company to have a set of
communicated for each purpose separately and not in any way
distort accounting data from managerial purposes

Materiality principle was issued before the


earlier principles, the additional notes to
general principles for business enterprises.
He asks a company to make judgments
about the costs or revenues involved a
change of accounting method. Accounting
standards should not apply to intangible
items.
This principle is not contradictory to that of
keeping records or true and fair view, as it
seeks to achieve the purpose of efficient
financial statements, which is the purpose
of those two principles.

Differences between IFRS and Japanese accounting system


Presentation extraordinary income and expenses in the annual financial statements:

JGAAP related items Extraordinary income and expenses are


presented according to their nature
IFRS, no element of profit or loss shall not be presented in the
financial statements as item (income or expense) Extraordinary
Recognition of contingent liabilities:
JGAAP: contingent liabilities are recognized in the accounts when
they are expenses or losses in certain circumstances indicated it
happens after a purchase and measure the likelihood is reflected in
its importance
IFRS: contingent liabilities that are liabilities arising from past
events are recognized regardless of the output probability of
economic resources, which occur when the fair value can be
measured reliably

Amortization of goodwill:
JGAAP: Goodwill is recognized as an asset and is amortized
on a systematic basis over a period of 20 years or less
IFRS: Goodwill is not depreciated
In August 2007, the Accounting Standards Board Japan
and the IASB announced their agreement to accelerate the
convergence by eliminating major differences between
GAAP Japan and IFRS by 2008 and the remaining by the
end of 2011.
Japanese authorities have imposed no obligation to
reconciliation
Community issuers that prepare their financial statements in
accordance with IFRS. Therefore, it was considered
appropriate,
from 1 January 2009 to consider that Japanese GAAP
equivalent to IFRS adopted.

Trends in the evolution of Japanese accounting


Recent years have brought major changes in the Japanese accounting
system. In 2001 and established a private body to create a conceptual
framework and to issue accounting standards. Since fiscal 2002 many of
the traditional characteristics of accounting were abandoned, the idea of
international accounting model orientation.
Summarizing Japanese accounting features, Christopher Nobes reach the
following conclusions:
German traits influence is manifested by:
- Government control;
- Inaccessible nature of the accounts;
- Uniform formats for financial statements;
- Predominana fiscal rules;
- Strict application of historical cost;
- Legal form prevailing reality;
- Legal reserve (25%) etc.

American traits influence is manifested by:


- special rules for listed companies;
- presence of US formats;
- information on cash flows;
- goodwill;
- chosen method in accounting for stock assessment should be the same as
that chosen for taxation (Supports all methods of assessment, but,
contrary to American practice, the most used is CMP);
- US accounting terminology used;
- Publication of "earnings per share".
Features of concern:
- using historical exchange rates for certain monetary items;
- expressing financial statements as a percentage;
- the mold special "statutory audit" (Statutory Audit).

The Annual Salary for Accountant

THE FUTURE OF ACCOUNTING IN JAPAN

Since the end of World War II, the Japanese economy has undergone tremendous
development, but it is the authors opinion that the accounting structure in Japan
has not kept pace with its own economic growth. For example, the practice of
publishing interim financial statements as part of the financial reporting of a
business was adopted only ten years ago, and consolidated financial statements
have only recently been required. As of yet, cash flow statements and value-added
statements are not included among published financial statements. Although
Japan ranks economically among the leading nations of the world, its financial
reporting is inadequate.
Since the end of the 1960s, an inter-national revolution in financial reporting
with economic income measurement giving ground to an informational approach,
has been in progress. In Japan, there also has been much interest in this
informational approach, but as yet there is little evidence that this approach soon
will replace economic income meas-urement. A more likely scenario is one in
which ever-increasing foreign investment in Japan and Japanese investment
abroad will force a gradual but definite evolutionary change or adaptation upon
the accounting structure in Japan. Future development of Japanese accounting
will be of special interest to accounting historians as international investment
patterns involving Japan become more complex.

5 Big Reasons To Smile On International


Accounting Day 10 November

You're in demand.Opportunities for accounting professionals are


increasing as companies strive to support business growth, keep up
with regulatory compliance mandates and fill job openings as more
baby boomers retire.
You're a hot commodity.Competition for talent is boosting
compensation. In addition to higher salaries, employers are offering
attractive incentives, such as extra vacation days and flexible
schedules, to attract and retain top performers.
You can find sizzling salary hot spots. Certain U.S. markets pay well
above the national average. Accountants can earn the most inNew York
City,San FranciscoandSan Jose, Calif., according to theSalary Guide.
You've got something special.Specialized skills are in short supply.
Talent shortages are emerging in areas such as accounting, audit,
financial analysis, compliance and business systems. The result?
Increased job opportunities and compensation for professionals with
these backgrounds.
You can bank on big data remaining a big deal. The world's
dependence on data is creating an array of opportunities for accounting
professionals who canmine and interpret the information.

Bibliographic sources:
Contabilitate internaional, Neculai Tabara, Emil Horomnea, MirelaCristina Mircea

Comparatie intre sistemul contabil japonez si standardele IFRS, English


version 3.0. Ernst & Young

Asemanari si deosebiri o comparatie intre IFRS si JGAAP,


PricewaterhouseCoopers

http://www.hp.jicpa.or.jp/english/
http://eurlex.europa.eu/Notice.do?
mode=dbl&lang=en&ihmlang=en&lng1=en,ro&lng2=bg,cs,da,de,el,en,es,et
,fi,fr,hu,it,lt,lv,mt,nl,pl,pt,ro,sk,sl,sv,&val=485600:cs

http://businessday.ro/03/2011/economia-japoniei-in-cifre-1970-2010/

You might also like