Accounting in Japan
- Accounting Standards
The Japanese “Generally Accepted Accounting Principles (GAAP)” is made up of:
- Business Accounting Principles issued by the Business Accounting Council (BAC);
- Accounting Standards issued by the Accounting Standards Board of Japan (ASBJ);
- Practical Guidelines issued by the JICPA.
- Accounting Regulation Bodies
BAC, Business Accounting Council
ASBJ, Accounting Standard Boards of Japan (website in English)
JICPA, Japanese Institute of Certified Accountants
FASF, Financial Accounting Standards Foundation
- Accounting Law
The legal system is made of three laws that are firmly interrelated in their accounting objectives and often referred to as the Triangular Legal System:
- Commercial Code;
- Securities and Exchange Law;
- Corporate Income Tax Law.
- Difference Between National and International Standards (IAS/IFRS)
- In March 2005 the Accounting Standards Board of Japan (ASBJ) and the International Accounting Standards Board (IASB) launched a joint project of convergence with the final goal of achieving convergence between Japanese GAAP and IFRS. Short-term projects are scheduled to be concluded by the beginning of 2008. For longer-term projects such as revenue recognition, performance reporting (financial statement presentation), intangibles (including R&D expenses), the scope of consolidation (including Special Purpose Entities "SPEs"), impairment of fixed assets and retirement benefits, the ASBJ has decided to initiate (research) projects in order to align the work with the projects run by the IASB and the FASB, the Financial accounting standards board.
- Tax Year
- From January 1st to December 31st.
- Accounting Reports
- The Commercial code gives the required regulations for a Limited Liability Company (Kabushiki Kaisha) to prepare an annual report and appendix.The annual report must be submitted to the general assembly of shareholders and must include the balance sheet and the income statement.
- Publication Requirements
- Only companies quoted in the stock-exchange have to publish their accounts. According to the law of transferable securities and the law of exchange, registrants must file to the Ministry of Finance the annual and biannual statement reports, as well as a copy in the foreign exchange markets where transferable securities are registered.
- Certified public accountants and tax accountants are specialists providing accounting and tax support to companies operating in Japan. Certified public accountants enjoy a monopoly on the performance of audits under the Certified Public Accountant Law, while tax accountants have a monopoly on tax agent services, preparation of tax documentation and tax consultations under the Certified Tax Accountant Law.
The accountancy profession in Japan practices with the title of a “Certified Public Accountant” (CPA) under the Certified Public Accountants Law legislated in 1948.
The Certified Public Accountants Law provides key matters relating to the accountancy profession such as examinations, qualifications, registrations, duties, responsibilities and penalties.
- Professional Accountancy Bodies
JICPA, The Japanese Institute of Certified Public Accountants
Tokyo certified public tax accountants’ association
- Member of the International Federation of Accountants (IFAC)
- The Japanese Institute of Certified Public Accountants (JICPA) is member of the International Federation of Accountants (IFAC).
- Member of Other Federation of Accountants
- JICPA is member of the Confederation of Asian and Pacific Accountants (CAPA)
- Audit Bodies
- Companies have to seek a statutory auditor to conduct an annual audit of the financial health of their organization. You can contact the Board of Audit of Japan, the Japan Corporate Auditors Association (JCAA) and the Certified Public accountants and auditing oversight board
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