Introduction
The Japanese Financial Accounting Standards Board (FASB) is an independent and independent body that was established to promote the development and dissemination of accounting standards. The FASB members are appointed for up to four years by the Financial Services Agency (FSA) to investigate and decide upon proposed changes to the existing accounting standards. The members of the FASB are a group of experts from across all areas within the public and private sectors who have an understanding of Accounting. They represent the internationally accepted knowledge within their respective fields.
The mission of the FASB is to promote the development and dissemination of accounting standards and to ensure the reliability and integrity of financial statements. The organization is also responsible for providing their opinion on the accounting conventions applicable in Japan in the form of the Japanese Financial Accounting Standards (JFAS). The Japanese Financial Accounting Standards are broadly divided into two parts known as the Japanese Accounting Standards (JAS) and the Japanese Corporate Accounting Standards (JCAS).
Overview of the Japanese Financial Accounting Standards
The Japanese Financial Accounting Standards are designed to serve three primary objectives;
1. To improve the accuracy of financial statements;
2. To clarify the responsibilities of the preparers, users, and auditors of statements;
3. To ensure the transparency of the financial statements.
The Japanese Financial Accounting Standards are divided into two parts, the Japanese Accounting Standards, and the Japanese Corporate Accounting Standards. The Japanese Accounting Standards focus on establishing the basic accounting concepts and principles, while the Japanese Corporate Accounting Standards provide guidance to corporations in the presentation of their financial statements.
The Japanese Accounting Standards are based on the international standards set by the International Accounting Standards Board (IASB), which is the international body responsible for the development of financial reporting standards. The accounting principles outlined in the Japanese Accounting Standards are substantially similar to those found in the IASB standards. The major differences between the two come down to the fact that the Japanese Accounting Standards are framed in the context of a country’s legal and regulatory framework, while the IASB standards are designed for a global context.
The Japanese Corporate Accounting Standards are designed to provide clarity and consistency among companies submitting their financial statements. The standards provide specific guidance for entities that are not utilizing the IASB standards, such as companies in the SME (small and medium-sized enterprise) sector. The standards cover a wide range of topics including corporate income tax, capital gains, corporate dividends, liabilities, and equity, accounting processes, and accounting principles.
Conclusion
The Japanese Financial Accounting Standards Board is an important body that provides guidance to corporations and SME’s in the Japanese economy on how to correctly and accurately prepare and present their financial statements. The standards are divided into two parts, the Japanese Accounting Standards and the Japanese Corporate Accounting Standards, with each addressing fundamental accounting principles, practices, and standards. The organization’s mission is to ensure the reliability and integrity of financial statements and to promote the development and dissemination of accounting standards while providing its opinion on the accounting conventions applicable in Japan.
