Japanese

ACCOUNTING FORUM2009

No. 17

JAPAN ACCOUNTING ASSOCIATION

Japan Accounting Association.
Liaison Office: Hayashi Building, 1-10 Kanda Nishiki-cho, Chiyoda-ku,
Tokyo 101-0054, Japan
Copyright© 2009, Japan Accounting Association1

Japanese ACCOUNTING FORUM 2009
JAPAN ACCOUNTING ASSOCIATIONPREFACEJapanese ACCOUNTING FORUM of Japan Accounting Association (JAA) is
published annually to publicize academic activities of JAA in English.
The first issue of Japanese ACCOUNTING FORUM was published in 1993. This
edition for 2009 is the 17th issue of Japanese ACCOUNTING FORUM.
This issue contains the summary of presentations at the 67th Annual Conference of JAA
which was held at Rikkyo University in Tokyo on September 8-10, 2008. It also
includes the reports of regional activities of JAA during the 2008 academic year.
I sincerely hope that Japanese ACCOUNTING FORUM serves the readers to better
understand the activities of JAA.

Kazuo Hiramatsu
Chairman of the International Committee andManaging Editor of Japanese ACOUNTING FORUM,
Japan Accounting Association

Contact:

Professor Kazuo Hiramatsu
School of Business Administration
Kwansei Gakuin University
1-1-155 Uegahara, Nishinomiya, Hyogo 662-8501, Japankhira@kwansei.ac.jp

2

JAPAN ACCOUNTINGASSOCIATION

Board of Directors (2006-2009)
President:
Shizuki Saito,

Meiji Gakuin University

Directors:
Hideyoshi Ando, Hitotsubashi University
Tadashi Ishizaki, Chuo University
Teruyuki Kawasaki, Konan University
Keiko Kitamura, Chuo University
Yoshinao Kozuma, Sophia University
Chitoshi Koga, Kobe University
Hisakatsu Sakurai, Kobe University
Terumi Takita, Doshisha University
Takeyuki Tani, Momoyama Gakuin University
Eiko Tsujiyama, Waseda University
Mitsunori Harada, Matsuyama University
Kazuo Hiramatsu, Kwansei Gakuin University
Yoshikuni Hirose, Waseda University
Toshiro Hiromoto, Hitotsubashi University
Shigemi Matsubara, Senshu University
Kohei Yamada, Meiji University3Japanese ACCOUNTING FORUM 2009

The 2009 Editorial Board
Managing Editor:
Kazuo Hiramatsu,

Kwansei Gakuin University

Deputy Managing Editor :Noriyuki Konishi, Aoyama Gakuin University
Editors:
Akihiro Noguchi, Nagoya University
Norio Sawabe, Kyoto University
Takashi Yaekura, Hosei University
Koji Kojima, Kwansei Gakuin University

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Past Editors of the Japanese ACCOUNTING FORUM :1993 - 1997
Seigo Nakajima, Managing Editor, Ferris University
Yukio Fujita, Deputy Managing Editor, Aichi Gakuin University
Youichi Hara, Ritsumeikan University
Kazuo Hiramatsu, Kwansei Gakuin University
Toshiro Hiromoto, Hitotsubashi University
Yoshiaki Jinnai, Tokyo Keizai University
Yoshihide Toba, Senshu University
1998 – 2000
Nobuo Kamata, Managing Editor, Chubu University
Kazuo Hiramatsu, Deputy Managing Editor, Kwansei Gakuin University
Tokugoro Murayama, Deputy Managing Editor, CPA
Shinji Hatta, Surugadai University
Akihiro Noguchi, Nagoya University
Yasuhito Ozawa, Senshu University
Shigeto Sasaki, Senshu University
Kazumasa Takemori, Chubu University
2001 – 2003
Nobuo Kamata, Managing Editor, Chubu University
Kazuo Hiramatsu, Deputy Managing Editor, Kwansei Gakuin University
Shinji Hatta, Surugadai University
Norio Igarashi, CPA
Noriyuki Konishi, Senshu University
Akihiro Noguchi, Nagoya University
Michimasa Satoh, Nagoya University
Kazumasa Takemori, Chubu University
2004 – 2006
Michiharu Sakurai, Managing Editor, Senshu University
Kazuo Hiramatsu, Deputy Managing Editor, Kwansei Gakuin University
Yukio Sakaguchi, Senshu University
Hironao Iwata, Tokyo International University

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JAPAN ACCOUNTING ASSOCIATION

Japanese
ACCOUNTING FORUM
No. 17, 2009
CONTENTS
Preface

Report2008 Annual Conference

Kazuo Hiramatsu(2)

Hideitsu Ohashi(9)

Plenary Sessions
Plenary Session 1:
Globalization

The Succession and Progress of Accounting Study against

Paradigm changes in accounting standards
Akiko Fujita(11)

Akihiro Noguchi(12)

Takashi Obinata(13)

Role of Legal Financial Accounting

Framework of Capital Market Research

The Significance and Limitation of Experimental Accounting
Hidetoshi Yamaji (14)Plenary Session 2 :Accounting

The Continuity or Non-Continuity of Japanese Management

The Trend and Future of Management Accounting Research in Japan:
A Bibliographic Study
Eisuke Yoshida
6(15)

Panasonic’s Management Accounting Reforms: Continuity/Discontinuity andGlobalization
Sumitaka Yoshitomi (16)On the Reflexive Relationship between Practice and Research in Management
Accounting
Norio Sawabe (17)Examining Accounting Research under Globalized Socio-Economic Conditions
Tomo Suzuki (18)Plenary Session 3 : Auditing Study against Globalization－the Response to the
New Study on the Auditing
On the Logic and Problems of a Review of Quarterly Financial Statements
Yoshihiro Inoue(19)

The New Auditor's Report：To Update the ISAs(UK & Ireland) for the New‘Clarity ISAs’
Hidehiko Yamazaki (20)Globalization and Audit Practice
Aiko Sekine (21)Globalization and Auditing Research– Succession, Development and Open Issues –Masahiro Yurino(22)

Special Committees
The Comprehensive Research on Accounting-Based Firm Valuation
Hisakatsu Sakurai (23)A Study on Revolution of Financial Reporting
Yoshikuni Hirose (23)7Subject Research Committee
Implementation and Development of Cost Accounting in Our Country:
Literature Historical Research
Koji Yamamoto (25)Study Groups
A Study on the International Trends and Basic Concepts in Environmental
Financial Accounting
Masao Kawano (26)Calculation Regulations of Companies Act
Masamichi Yoshioka(27)
Regional Reports
Hokkaido Region
Tohoku Region
Kanto Region
Chubu Region
Kansai Region
Kyushu Region

Yuji Yoneyama
Yoshio Hosaka
Masaaki Takamatsu
Akihiro Noguchi
Tetsuo Ukai
Chikako Ozu

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(29)
(29)
(30)
(31)
(32)
(32)

2008 Annual Conference of JAA
Report2008 Annual Conference
Chairman of 2008
Annual Conference

Hideitsu Ohashi
Rikkyo University
Program
The 67th Annual Conference (2008) of the Japan Accounting Association was
hosted by Rikkyo University in Tokyo from September 8-10, 2008. The main theme of
the conference was “The Succession and Progress of Accounting Study against
Globalization”.
On September 8, meetings of the Council and the General Assembly of Membershipwere held, and soon after those events, two Study Group research reports and threereports by Committees, that is, one Special Subject Committee research and twoSpecial Committee research reports were presented.
On September 9, before the sessions of the main theme, concurrent sessions were
held. In addition to those, we had two Special Programs. One is the report that wasdevoted to invited presentations by the researchers of the Korean Accounting
Association and another is sponsored by Accounting Standards Board of Japan. At thesession of the main theme mentioned above, three plenary sessions were held.
On September 10, before the panel discussions of the plenary sessions, concurrent
sessions were held. There were many reports on various themes were presented by themembers. After that, the panel discussions of the three plenary sessions were held very
actively.
A banquet was held in the evening at the Metropolitan Hotel. Six hundred members
and nonmembers enjoyed the friendly party. During these days of sessions, one
thousand and one hundred participants attended the meeting and actively participatedin discussions. The conference of this year was a great success.
The schedule of the conference was as follows:9EventDate and Time
Screening Committee for Awards
Sep.7 11:30 to 15:00
Meeting of the Board of Directors
15:00 to 17:30
Meeting of the Council
Sep.8 10:00 to 12:00
Meeting of the General Assembly of
13:00 to 14:30
Membership
Study Group Reports
14:40 to 15:20
Special Subject Committee Report
15:30 to 16:10
Special Committee Reports
16:15 to 17:40
Banquet18:30 to 20:30
Concurrent Sessions
Sep.9
ReportbyKoreanAccounting
Association
Plenary Sessions
1 The Succession and Progress of
Accounting Study in Globalization
2 The Continuity or Non-Continuity ofJapanese Management Accounting
3 Auditing Study against Globalization－the Response to the New Study on
the Auditing
ASBJ Session
Concurrent Sessions
Sep.10Panel Discussions
1 The Succession and Progress of
Accounting
StudyagainstGlobalization
2 The Continuity or Non-Continuity ofJapanese Management Accounting
3 Auditing Study against Globalization－the Response to the New Study on
the Auditing
Memorial Lectures
Farewell Party

10

9:50 to 12:00
9:55 to 11:40

Venue
RikkyoUniversity
RikkyoUniversity

Metropolitan
Hotel
RikkyoUniversity

13:00 to 15:10

15:40 to 17:10
9:50 to 12:00
13:00 to 15:00

15:30 to 17:20
17:30 to 19:00

RikkyoUniversity

2008 Annual Conference of JAA
Plenary Session 1:
The Succession and Progress of Accounting Study against
Globalization

Paradigm Changes in Accounting Standards
Akiko Fujita
Meiji Gakuin University
In this presentation, we proposed an analytical review of paradigm changes inaccounting standards during the second half of the 20th century. Several arguments infavor of reforming these paradigms were also summarized and assessed critically.
From the late 1960’s, a large number of these arguments were related to accounting
measurement. Some authors argued recently that the theoretical basis underlying
accounting standards had changed from a revenue-expense approach based on
historical cost into an assets-liabilities approach based on fair value; in this regard, they
insisted on the usefulness of historical cost for the matching principle.
Focusing on measurement issues, we analyzed to what extent changes in accounting
theory from Littleton to FASB’s statements - including Edwards & Bell, Sprouse &Moonitz, Chambers among others - contributed to its development or created newissues.
After reviewing the traditional paradigm, we pointed out that historical costprovided a consistent measurement basis since objects and means of measurement
adopted a similar point of view. In other words, investments (objects) are assessed at
the historical cost incurred by the outflow of invested resources (means). Then, we
discussed changes in what is to be measured and how it should be measured in theframe of the new paradigm.

11

Role of Legal Financial Accounting
Akihiro Noguchi
Nagoya University
The word “legal financial accounting” became popular in Japan at the beginning of
1970s, when Commercial Code was amended and the role of Business Accounting
Principles was under controversy. Even now, it is the main stream of the accounting
research in Japan. Based on the theory, empirical or experimental researches have to
conducted, and the results of those researches should be reflected in accounting rules
and regulations to make the society better, which is the role of legal financial
accounting.
In Japan, Company Law was enacted by amending the Commercial Code in 2006.
The law does not necessarily reflect the distinction between paid in capital and retained
earnings when calculating the amount available for dividends. It became necessary to
explain the reason for that distinction. It became necessary to reconsider how to protect
creditors.
International convergence of accounting standards will change Japanese legal
financial accounting research. The results of the researches must have impact on thediscussion in London. Research papers should be written in English and published in
the international journals. English became crucial, not only for Japanese accountants,
but also for Japanese professors.

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Framework of Capital Market Research
Takashi Obinata
University of Tokyo
The first purpose of this paper is to show the framework of capital market researchand to investigate the interaction between the theoretical works and empirical research.
Both commonly share GAAP and the underlying basic concepts. However, theoriginality of ‘Japanese’ empirical research may decrease under the age of‘Convergence’. Researchers should pay more attention to the research theme anddesign than ever. Education and instruction for Ph.D. candidates and for young
researchers will play a vital role.
Based on these sense of crisis, the second purpose of this paper is to compare theusefulness between net income and comprehensive income. The samples are collectedfrom the U.S market. The results by SUR (seemingly unrelated regression) show thefollowing evidence. Although net income is more persistent than comprehensive
income in one year, the persistence of comprehensive income is higher than net income
in another year. We cannot support the claim that one is always more persistent thananother. Inconsistent with prior expectation, comprehensive income is not always
more timely than net income. We cannot detect the significant difference in theconservatism between net income and comprehensive income. The value relevanceand price informativeness of net income is not significantly different from those ofcomprehensive income. We cannot find the strong evidence, which support theinsistence that one is superior to another. These empirical results will make animportant contribution to the setting of accounting standard for performance reporting.

13

The Significance and Limitation of Experimental Accounting
Hidetoshi Yamaji
Kobe University

14

2008 Annual Conference of JAA
Plenary Session 2:
The Continuity or Non-Continuity of Japanese Management
Accounting

The Trend and Future of Management Accounting Researchin Japan: A Bibliographic Study
Eisuke Yoshida
Keio University
This article has two parts. The first part reviews the state of research in management
accounting as evidenced by 774 articles published in Japan from 1980 to 2007 in four
leading journals: Genka Keisan Kenkyu (Journal of Cost Accounting), Kaikei(Accounting), Kaikei Proguresu (Accounting Progress), Kanri Kaikei Gaku (Journal ofManagement Accounting Research, Japan). During this period new topics were
investigated, new journals came into existence, and different research methods andsites were emphasized. To chart the field we split the 28-year period into three decades
and then compare the kind of topics studied, the research sites investigated, theresearch methods used, and the source disciplines employed. As the results, first, thesource disciplines based on much Japanese management accounting article’s focus
were not clear. Second, diversity of the research methods was not enough. Third, many
articles were normative. The second part focuses on a function of management
accounting as tension management. We propose a framework for management
accounting research, which focuses on a concept of dynamic tension.

15

Panasonic’s Management Accounting Reforms:
Continuity/Discontinuity and Globalization
Sumitaka Yoshitomi
Corporate Accounting Group, Panasonic Corporation
In 2003, Panasonic enforced drastic management system reforms, including a shift
from our traditional product-based divisional management system to globallyconsolidated management by business domain accompanied with the introduction of anew overseas share investment system and a consolidated dividend system by businessdomain.
To put our unwavering management philosophy into practice in an ever-changing
environment, we must reform our business management methods on a discontinuous
basis. It is also important to retain support for the changes at workplaces in continuity
with the past context to ensure effective reforms at operation sites. Panasonic’s
management system reforms were completed very rapidly for the following reasons:Problems with the divisional system had been widely recognized within theorganization; the new management system matched our company’s traditional businessvalues; and performance evaluation criteria were set to facilitate frontline management
while remaining true to the existing management systems.
Effective information infrastructures and systems are important to success inoperating global-scale business. At the same time, it is also essential to share corporate
philosophy and culture as implicit understanding throughout the company. At
Panasonic, the presence of a unique accounting personnel management system tomaintain authority over all accounting members, and of corporate accounting rules toserve as a ‘bible’ to them, played decisive roles in allowing the new policy and rules tobe fully understood and implemented worldwide.

16

On the Reflexive Relationship between Practice and Researchin Management Accounting
Norio Sawabe
Kyoto University
Management accounting research is both normative and empirical. Management
accounting often establishes itself as a social institution that defines what is right to doin a certain situation. Empirical management accounting research, regardless oforiginal authors’ intentions, contributes to legitimize some management accounting
practices over others when it describes best practices of excellent companies.
Management accounting research has reflexive relationship with what it tries to
describe and analyze.
When this reflexivity between management accounting research and practice isacknowledged, it becomes apparent that conventional scientific approach, which isbased on the assumption that the observer and the observed are methodologicallyindependent to each other, provides partial picture at best. Furthermore, management
accounting practices have emergent properties that are local and concrete, whilescientific management accounting research seeks truth that is universal and abstract.
There is a need to appreciate the significance of reflexive relationships between
scientific management accounting research and technical management accounting
practices.
Phronetic approach is proposed by Flybjerg (2001) and Nonaka & Tohyama (2005)
that shed lights on the knowing processes where scientific knowledge is integrated
with technological knowledge. It is contended that case based research should be
deployed in line with phronetic approach in order to capture the reflexive nature ofmanagement accounting research and practices. Valuable starting point is obtained
for management accounting researchers by modifying “scientific enterprise model”
proposed by Roethlisberger (1977) and introduced to management accounting researchby Kaplan (1986) where “clinical knowledge” as link between scientific knowledge
and practical knowledge.
Flybjerg, B. (2001) Making Social Science Matter, Cambridge, UK: Cambridge
University Press.
Kaplan, R. (1986) “The Role for Empirical Research in Management Accounting,” AOS,
11(4/5): 429-452.
Roesthlisberger, F. J. (1977) The Elusive Phenomena, Cambridge, Mass.: Harvard
University Press.
17

Examining Accounting Researchunder Globalized Socio-Economic Conditions
Tomo SuzukiSaïd Business School, University of Oxford
One often misunderstands that mutual understanding of international matters,
accounting problems or otherwise, can be effectively communicated by a single
common language which functions as an efficient mediator between different culturaland socio-economic communities. Accounting academia has witnessed such a myth in
the proliferation of the so-called top journals such as The Accounting Review or
Accounting Organizations and Society. Indeed, these top journals have become thepowerful media and mode to efficiently convey facts and ideas across the globe.
However, the informational vector in this process has never been bilateral or mutual.
The knowledge created in this process is often seriously biased due to English as thecommon but value-infused epistemic foundation which gives Anglo-American andEnglish-fluent academics dominant power in the creation of certain knowledge.
Simply put, how can we share the Japanese or any other locally-specific knowledgeof accounting in the globalized socio-economy? Unlike Anglo-American countries,
Japan embraces various forms of publication such as Kiyo (University based
un-peer-reviewed) journals, quasi academic-professional journals and monographs
which help academics approach various accounting problems in different frameworks
on a timely basis. In order to challenge the Anglo-America centric knowledge anddevelop more democratic knowledge of accounting, there seems to be a need for an
institutionally organised strategy which makes voices of Japan heard in the globalizedsocio-economic environment.

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2008 Annual Conference of JAA

Plenary Session 3:
Auditing Study against Globalization - the Response to the New
Study on the Auditing

On the Logic and Problems of a Review ofQuarterly Financial Statements
Yoshihiro Inoue
Kagawa University
A review of quarterly financial statements is performed by the same independent
auditor of the annual financial statements of the entity. Through performing the auditof the annual financial statements, the auditor obtains an understanding of the entity
and its environment, including its internal control. This understanding assists theauditor in focusing the inquiries to be made and analytical and other review procedures
to be applied. This system is a key to attaining the level of assurance that is required
for the review.
However, what is the level of assurance that is required for the review? It is
important to make it clear, for it determines the extent of auditor’s responsibility. In
order to do this, we need to understand the determinants of the level of assurance forthe review. It is said that a major determinant of the level of assurance that can beprovided is nature, timing, and extent of the procedures adopted by an auditor.
However, the important reasons for not giving a high level assurance for the review
are not only the procedures adopted by the auditor but also the nature of quarterly
financial statements.

19

The New Auditor's Report:
To Update the ISAs (UK & Ireland) for the New ‘Clarity ISAs’
Hidehiko Yamazaki
Senshu University
The purpose of this study is to clarify the differences between the form of the
independent auditor's report in the ISAs (UK and Ireland) issued by the Auditing
Practices Board and in the new ‘Clarity ISAs’ issued by International Auditing andAssurance Standards Board and to consider the possibility of the convergence of the
ISAs (UK and Ireland) into ‘Clarity ISAs’.
There are two major differences between the ISAs (UK and Ireland) and the new‘Clarity ISAs’ about auditor's opinions. One is on the financial statements; another ison the information of the non-financial statements.
In UK, in some rare cases, management must depart from GAAP―IFRS―in orderto preset the financial statements fairly. This is a so-called “departure clause”. Becauseof this clause, independent auditors express their opinion not only on the fairness of thefinancial statements but also on the compliance with GAAP. On the other hand, Clarity
ISAs require independent auditors to express their opinion on the fairness of thefinancial statements in accordance with IFRS. This study suggests it is not likely that
the ISAs (UK and Ireland) is adopted by Clarity ISAs on this point, because
independent auditors are able to express unqualified opinion on the financial
statements which are not complied with IFRS in some rare cases―in the event that a“departure clause” is applied.
In UK, independent auditors also express their opinion on director's reports anddirector's remuneration reports. There are some matters in question in such practices.
For example, there is no standard about how to prepare these statements. This study
suggests it is possible that the ISAs (UK and Ireland) are adopted by Clarity ISAs on
this point.

20

Globalization and Audit Practice
Aiko Sekine
CPA
As a result of globalization, how has the audit practice changed? As a practitioner,
I will provide an overview of the changes and offer my thoughts on how the auditor
should respond in the future.
With the advent of globalization, the activities of many companies are not limited to
one country or even one region; rather many companies operate in diverse markets andindustries all around the world. However, since each country has a different system ofmarket regulation, as well as influence of local language and culture, the accounting
and auditing industry is also different. Under such a situation, coordination with theauditor of investment in other countries is necessary. At the same time, the accounting
standards used for the investment in other countries are usually converted into the oneused for parent companies.
On the other hand, investors would like to see the financial results of their overseas
operations based on the accounting standards, which they usually use and are mostfamiliar with. Therefore, if different accounting standards are used for certain
investment, it would not be convenient for investors, and investors might ask to have aconverted result based on their own accounting standards. Under the circumstances,the different accounting standards used in different countries would have much effecton each other.
As globalization continues, it would not be convenient to have different accounting
standards in different countries. Therefore, the need to have converged international
accounting standards is important. There also would be the need to the convergedinternational standards on auditing.
Auditors should actively seek such convergence.

21

Globalization and Auditing Research– Succession, Development and Open Issues –Masahiro Yurino
Doshisha University
The independent audit system of Japan seems to be under the control of the
Financial Services Agency now. Five years ago, the CPAs and Audit Corporations
strongly impressed their power on Japanese society though they belong to private
sector.
This system of the American type stood on the very edge as for abolition when the
Occupation ended. The existence of “power” that did not want to establish the system
was exposed, though it caused only the abolition of SEC as a result.
But, it was not because of no understanding about the essence of the audit byaccountants. We can easily point out some important historical facts about one hundredago. The necessity of Stock Market and Disclosure System as the infrastructure topromote the nation's economy was recognized clearly. In addition, “for the public” wasemphasized as a feature of the Accounting Profession. Moreover, necessity of moving
the audit authority to private sector from public sector was recognized.
However, the endeavor came to nothing. What’s wrong? I simply believe that theindependent auditing system by Accounting Profession was hated by the “power”, thatis both the business world and officialdom.
Recently, the importance of the accountability of both officialdom and the politicalworld has come to be pointed out severely. On the other hand, the description of theaccountability of the public sector has come to be performed to the textbook of thehigh school. I feel the symptom of change begins to appear.

22

2008 Annual Conference of JAA
Special Committee
The Comprehensive Research on Accounting-Based Firm Valuation
Chair: Hisakatsu Sakurai
Kobe University
The purpose of this special committee is to investigate various issues of evaluating
firm value based on accounting information. After having been extensively reviewing
prior literature, we empirically investigate a number of research questions aboutaccounting-based firm valuation. The final report includes very interesting topics asfollows. In the first two chapters, we show that accounting-based firm valuation has
actual usefulness because stock markets are not always absolutely efficient. In chapter
three through six, we use accounting information to estimate firm value, and thenexamine empirical issues related to it. For example, we discuss how to selectvalue-driver and comparable firms in equity valuation using multiples. We also reportthat residual income model has more advantages than other valuation models such as
discounted cash flow model, and that net income is generally preferable tocomprehensive income as an input of residual income model. In the remaining chaptersfrom seven to thirteen, we consider practical issues to utilize residual income model.
To estimate firm value based on it, investors have to predict future performance,accounting earnings and dividends, and the cost of capital. We provide many findingsthat have valuable implications for them.

Special Committee
A Study on Revolution of Financial Reporting
Chair: Yoshikuni Hirose
Waseda University
There appears to be many aspects needing improvement in the area of financial
reporting processes. As “value drivers,” which determine enterprise values, gradually
move to intangibles and Corporate Social Responsibilities, companies’ traditional
financial information can now rarely explain their enterprise values. In order to enable23

stakeholders to make an informed judgment or an informed decision, while eliminating
information asymmetry, it is important to redefine financial reporting processes andother infrastructure, focusing on diversified disclosure issues and cost burden issues.
In addition, it is also important for us to fundamentally reconsider how businessaccounting can or should address these various financial reporting issues. These are theissues and objectives of this Special Committee.
In our interim reporting, we identified the issues, objectives and perspectives of theSpecial Committee’s study as well as fundamental assumption in the study.
We first analyzed our financial reporting processes based on various criteria such asmeasurement characteristics, functionalities, reporting channels, accounting units,
public/non-public, intended users, reporting media, reporting periods, information
characteristics, and sections and revealed what needs to be handed down and whatneeds to be changed. Then, we analyzed the relationship between our businessaccounting systems and financial reporting from historical perspective and revealed
what needs to be handed down and what needs to be changed. Furthermore, we
analyzed knowledge from financial reporting systems in Europe and the United Statesin detail in order to reveal what we need to learn from them for the future.
We also analyzed, from experimental study perspective, how timeliness and methodof disclosure would impact the usefulness of financial reporting, surveyed precedingstudies on the effects of implementation of electronic disclosure system, and pointed
out necessity of similar studies in Japan. In addition, we drew a roadmap toexperimental study on the usefulness of non-financial information under Japan’s
financial reporting environment, based on preceding studies on the usefulness of
non-financial information.
Members of Committee：
Yoshikuni Hirose, chairman (Waseda University)
Young Duke Hah (Waseda University)
Michimasa Hamamoto (Yokohama National University)
Yasuhito Hanado (Waseda University)
Koji Kurata (Rikkyo University)
Yasunori Matsui (Rikkyo University)
Shuji Mizoguchi (Yokohama National University)
Wataru Nagastuka (Fukuoka University)
Fumio Naito (Konan University)
Ryuichi Nakajima (Meikai University)
Hiroshi Obata (Hitotsubashi University)
Masashi Okumura (Waseda University)
Tomoki Oshika (Waseda University)
Chika Saka (Kwansei Gakuin University)
24

Nobuhiko Sato (Meiji University)
Kazuyuki Suda (Waseda University)
Kazumi Suzuki (Kobe University)
Kazuo Takeda (Sugiyama Jogakuen University)
Yoshihiro Tokuga (Kyoto University)
Tsuyoshi Watanabe (Fukuoka University)
Masao Yanaga (Tsukuba University)
Yuji Yoneyama (Hokkaido University)
Shiko Yun (Aoyama Gakuin University)

Subject Research Committee
Implementation and Development of Cost Accounting
in Our Country: Literature Historical Research
Chair: Koji Yamamoto
Osaka Prefecture University
The purpose of this Subject Research Committee is to examine the role of theresearcher and a man of business in the process of the implementation and developmentof cost accounting in Japan and to verify what kind of argument was done at that time
based on literature historically.
A literature review was held by the analysis framework based on a logical stage of theimplementation and development. We divided it into the following stages as“introduction, recognition”, “implementation, reception”, and “active adaptation”.
In the last year’s interim report, we considered the cost control function and thestandard costing. These were taken away to the final report, Part I to III.
Then, as a point of arguments was spread to the strategic cost management, thesecontents were put together in Part IV “the development of the traditional costmanagement” and Part V “the foundation formation of the strategic cost management inour country”.
We took up the arguments such as a revision of the cost accounting standard, theinfluence of the governmental reports, direct costing, cost accounting of the service
industry and the small and medium-sized enterprises, Value Engineering as a tool ofTarget Costing, the response of ABC and Quality Costing in our country.
Finally we mentioned the each role of researcher and a man of business. Especiallythe importance of the thing that the researcher must recognize a role expectation fromthe business was pointed out.
25

Study GroupA Study on the International Trends and Basic Concepts
in Environmental Financial Accounting
Chair: Masao Kawano
Chuo University
The objective of this study is to clarify the possibilities and directions ofenvironmental financial accounting in the Japanese context. For convenience’s sake,environmental financial accounting can be defined as an area of accounting for theenvironment within the framework of financial accounting. To achieve this objective,
first, we have researched the trends in theories, regulations and practices ofenvironmental financial accounting, which have been studied by the international
institutions and the other professional accountants’ bodies in western countries. Second,
we have tried to clarify the basic concepts underlying these trends in westernenvironmental financial accounting through comparative studies.
As a consequence, we believe that environmental financial accounting trends will bepromoted by the environmental financial accounting standards published by FASB,IASB and the like. Our survey clarifies the tendency that companies have been
disclosing information related to soil contamination and the treatment of PCB wastes.
However, this information has not been independently disclosed in the financial
statements in terms of materiality. Therefore, more stringent environmentally-related
accounting standards are required, so that the users of financial statements canunderstand the environmental aspects of a given company.
We also examined environmentally-related economic events such as asset retirement,
soil contamination and emission trading as concrete issues in environmental financial
accounting. From a consideration of these topics, we suggest that the notions ofenvironmental assets and liabilities have been expanding.
As the approach for the recognition of assets and liabilities has been shifting fromthe revenue-expense approach (R/E approach) to the asset-liability approach (A/L
approach), environmental expenditures have been increasingly recognized through the
expanded interpretation of the increased-future economic benefits, and these
expenditures are increasingly being capitalized as environmental assets. In line withasset recognition, environmental liability is increasingly being recognized dependingon the A/R approach. As a result, we believe that the notion of environmental asset andliability will be developed further.
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Even if environmental asset, expense and liability are disclosed in financial
statements independently, environmentally-related non-financial information is still
useful for the users who would like to make decisions using environmental financial
information. Therefore, it is suggested that non-financial environmental information,such as emission volumes of carbon, should also be disclosed in the note to thefinancial statements or the other parts of any given annual report.

Study GroupCalculation Regulations of Companies Act
Chair: Masamichi Yoshioka
Tokyo University of Science
Introduction
The Japanese accounting system has consisted from the triple structure, that is,Companies Act Accounting, Financial Instruments and Exchange Act Accounting
and Corporate Income Tax Accounting. Among the three Accountings, Companies
Act Accounting occupies the core position of the accounting system in Japan. The
purpose of the study group is to examine the calculation regulations of surplus
dividend.
1. Japanese Accounting System
Under this kind of circumstances, Financial Instruments and Exchange Act
Accounting prepares financial statements according to “Business Accounting
Principles” and “Regulations of Financial Statements” . Because it has designed todisclose timely financial positions of companies to investors. However, Companies
Act Accounting which prepares financial statements has two purposes to disclose
information and to regulate surplus dividend. Though, Income Tax Accounting which
prepares final return statements has to put a tax on the increase part of the net capital
without transactions of owned capital. So, the regulation of surplus are essential to for
Companies Act. Accounting
2. Regulations of Surplus Dividend
Companies Act Accounting regulates surplus dividend on the basis of deferredsurplus profit. The profit is calculated by Financial Instruments and Exchange
Act Accounting. The regulations of surplus dividend can make the source of
surplus dividend including shareholders’ equity, and they weaken a capital27

maintenance more restrict than Old Commercial Law. This having, the study
group can say that the legal framework as protection of the creditors was lost.
However, the creditors could make decision about their credits to companies bydisclosing the statement of change in stockholders’ equity.
Conclusion
As a result, Companies Act would make economic society equally applying theregulation of surplus dividend.

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2008 Annual Conference of JAA
Regional Reports
Hokkaido Region
Yuji Yoneyama
Hokkaido University
The regional meetings were held in 2008 as follows.
1. The 73rd Regional Meeting at Otaru University of Commerce on May 17th,
2008.
(1) “Status and New Directions in Balanced Scorecard Research”, Sakichi
Otomasa, Otaru University of Commerce.
(2) “A Study on the Audit of Internal Control over Financial Reporting in Japan”,
Akira Kanie, Hokkaido University.
(3) “On the Three Partition Method of Merchandise”, Kunitoshi Akiba,
Hokkai-Gakuen University.
2. The 74th Regional Meeting at Doutokukaikan on November 22nd, 2008.
(1) “Brief Overview on Audit Industry in Hokkaido Prefecture”, Nobuyuki
Ishikawa, Hokuto & Co., Hokkaido University Accounting School.
(2) “The Development of Accounting Information Systems Research”, Masahiko
Sakai, Otaru University of Commerce.

Tohoku Region
Yoshio Hosaka
Tohoku Gakuin University
The Tohoku Region of the Japan Accounting Association covers the north eastern(Tohoku) area of the main land.
In 2008, following two meetings were held.
(1)The 74th Meeting at Tohoku University on May 24th, 2008.
(1) “Informativeness of Income Smoothing as a Role of Accruals-Evidence from29

SEC Standard Japanese Pubic Firms-”, Masumi Nakashima, Fukushima College.
(2) “The Origin of Accounting Standardization in France”, Teruo Kaneko, Aomori
Public College.
(2)The 75th Meeting at Junior College of Aizu on November 1st, 2008.
(1) “A Study of Present Condition and Cost Information of Dental Clinic”, Koichi
Mori, PhD Candidate, Graduate School of Business Administration, Ishinomaki
Senshu University.
(2) “The Market's Reaction to the Going-Concern Information and the Role of theGoing-Concern Audit in the Market”, Takuya Oikawa, Aomori Public College,
Yoshio Ohashi, Junior College of Aizu.

Kanto Region
Masaaki Takamatsu
Meiji Gakuin University
The 56th regional meeting was held at Meiji Gakuin University on December 6th,
2008. The main theme of the meeting was “The Expansion of Disclosure and Its
Influences on Accounting”. Discussions were coordinated by Kunio Ito, Hitotubashi
University.
Following reports and panel discussions were presented.
(1) “Expansion and Issues of Financial Information Disclosure with Tagging
Language XBRL”, Cindy Yoshiko Shirata, Tsukuba University.
(2) “Disclosure Level and the Residual Income”, Takashi Yaekura, Hosei
University.
(3) “Retroactive Restatement of Segmental Information: A Study on the Case ofSony”, Seiki Sato, Meiji Gakuin University.
(4) “The Development of Disclosure System and Auditors' Judgments”, Yoshihiro
Machida, Aoyama Gakuin University.

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Chubu Region
Akihiro Noguchi
Nagoya University
The 117th Regional Meeting at Chukyo University on May 10th, 2008.
1. Fund, Capital and Capital Surplus in Accounting for Universities, Morihiko Umeda,
Chukyo University.
2. Weakness of the Standard Costing in the Efficiency Management under the Line
Production System, Hiroshi Ozawa, Nagoya University.
3. Market Reaction to the Introduction of Accounting for Impairment on Assets, Ichiro
Mukai, Aichi Gakuin University.
1. The 118 th Regional Meeting at Nagoya City University on July 12th, 2008.
(1) “Strategy for Accounting Standards Setting by IASB”, Izumi Washizu, Chubu
University.
(2) “Measurement of Insurance Contract”, Junpei Ogawa, Nagoya City University.
(3) “Financial Reporting by XBRL”, Hitoshi Abe, Chubu University.
(4) “Accounting Standard Setting for Substance over Form”, Shigeho Nakayama,
Toyohashi Sozo University.
2. The 119th Regional Meeting at Meijo University on December 6th, 2008.
Theme: Process Management and Accounting-from the perspectives of Manufacturing
Management and Internal Control SystemModerator: Makoto Kawada, Meijo University(1) “Process Management and Management Accounting”, Noriyuki Imai, Toyota
Financial Services Corporation.
(2) “TPS and Cost Management”, Shogo Kimura, Nagoya University.
(3) “Income Smoothing and the Just-In-Time System in the Japanese Automobile
Industry”, Michio Kunimura, Meijo University.
(4) “Next Action Beyond Just Meeting the Statutory Requirements-From aStandpoint of Internal Control in the Manufacture Industry-”, Hiroyuki Kato, CPA.

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Kansai Region
Tetsuo Ukai
Doshisha University
The 58th Kansai regional meeting was held at Doshisha University on December 13th,
2008. The main theme of the meeting was “How are interpreted the Present
Accounting Practice? －Historical Cost Model, Fair Values Model, Mixed Attribute
Model－” . The following three papers were presented and Prof. Norio Takasu(University of Hyogo) moderated the main session and their discussion.
(1) “Present-day Accounting in Terms of Historical Cost Principle”, Yasuhiro Yamada,
Shiga University.
(2) “Issues in Applying Fair Value Accounting to Accounting Practice”, Naohiro
Urasaki, Kinki University.
(3) “A Study on an Accounting for mixed Attribute Model in Assets Measurement”,
Satoshi Taguchi, Doshisha University.

Before the main session, we had three parallel sessions. Nine papers were presented
at these sessions.

Kyushu Region
Chikako Ozu
Kyushu University
The Japanese Accounting Association (JAA) Kyushu regional congresses are
regularly held two times a year – in August and March. This year, the summer congress
was held at Kinki University, Iizuka campus and the early spring congress wasassembled at Fukuoka University. The title, name of the presenters at each of themeetings are shown below:
1. The 82th meeting held at Kinki University on August 2nd, 2008.
(1) “Some Issues on Statement of Changes in Equity”, Satoshi Akagi, Kyushu
Sangyo University.
(2) “Developing a Measurement Method of Time Efficiency Practice: Case Study
Approach”, Tamiya Mizushima, Nakamura Gakuen University.
(3) “Recent Movement on the Accounting Convergence”, Isamu Iwasaki, Kyushu
University.
32

(4) “A Discussion on Tax Law and Business Accounting”, Tadashi Yuge, Kyushu
Kyoritsu University.
2. The 83th meeting held at Fukuoka University on March 28th, 2009.
(1) “Financial Reporting of Non-Profit-Organization”, Shuzo Hino, Nakamura
Gakuen University.
(2) “The PFI Accounting Standards and Its Recognition Process in the EU”,
Keiichi Oishi, Kyushu University.
(3) “Some Issues on Revision of Local Public Accounting System”, Tatsumine Ito,
Seinan Gakuin University.
(4) “An Analysis of Disparities between Earnings and Cash-flows”, Kouji Ishiuchi,
Kurume University.

33