Japanese
ACCOUNTING FORUM 2013

No. 21JAPAN

ACCOUNTING ASSOCIATION

Japan Accounting Association
Liaison Office:Hayashi Building, 1-10 Kanda Nishiki-cho, Chiyoda-ku,
Tokyo 101-0054, Japan
Copyright© 2013, Japan Accounting Association

Japanese ACCOUNTING FORUM 2013
JAPAN ACCOUNTING ASSOCIATION

Preface
Japanese 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 2013is the 21th issue of Japanese ACCOUNTING FORUM.
This issue contains the summary of presentations at the 71th Annual Conferenceof JAA which was hosted by Hitotsubashi University in Tokyo on August 29 September 1, 2012. It also includes the reports of regional activities of JAA during
the 2012 academic year.
I sincerely hope that Japanese ACCOUNTING FORUM serves the readers tobetter understand the activities of JAA.

Yoshihiro Tokuga
Chairman of the International Committee andManaging Editor of Japanese ACCOUNTING FORUM,
Japan Accounting Association

Contact: Professor Yoshihiro Tokuga
Graduate School of Management
Kyoto University
Yoshida Honmachi, Sakyo-ku,
Kyoto 606-8501, JAPAN
tokuga@econ.kyoto-u.ac.jp

1

JAPAN ACCOUNTING ASSOCIATION
Board of Directors (2013)

President:
Kunio Ito, Hitotsubashi University
Directors:
Koji Ishiuchi, Japan University of Economics
Shigeo Ohtsuka, Chiba University
Hiroshi Obata, Hitotsubashi Unversity
Akitomo Kajiura, Kwansei Gakuin University
Teruyuki Kawasaki, Konan University
Keiko Kitamura, Chuo University
Kouji Kurata, Rikkyo University
Shinya Saitou, Yokohama National University
Hisakatsu Sakurai, Kobe University
Nobuhiko Sato, Kumamoto Gakuen University
Kenji Shiba, Kansai University
Yoshihiro Tokuga, Kyoto University
Fumio Naito, Konan University
Kazuo Hiramatsu, Kwansei Gakuin University
Yoshikuni Hirose, Waseda University
Shuji Mizoguti, Yokohama National University

2

JAPAN ACCOUNTING ASSOCIATIONInternational Committee and 2013 Editorial Board

Managing Editor:
Yoshihiro Tokuga, Kyoto University
Deputy Managing Editor:
Nobuhiko Sato, Kumamoto Gakuen University
Editors:
Noriyuki Konishi, Aoyama Gakuin University
Chika Saka, Kwansei Gakuin University
Tokuei Sugimoto, Kwansei Gakuin University
Tomomi Shiosaki, Hiroshima City University
Noriyuki Tsunogaya, Nagoya University
Makoto Nakano, Hitotsubashi University
Akihiro Noguchi, Nagoya University

3

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
4

Past Editors of the Japanese ACCOUNTING FORUM :2007 – 2009
Kazuo Hiramatsu, Managing Editor, Kwansei Gakuin University
Noriyuki Konishi, Deputy Managing Editor, Okayama University
Akihiro Noguchi, Nagoya University
Norio Sawabe, Kyoto University
Takashi Yaekura, Hosei University
Koji Kojima, Kwansei Gakuin University

2010 – 2012
Yoshihiro Tokuga, Managing Editor, Kyoto University
Nobuhiko Sato, Deputy Managing Editor, Meiji University
Koji Kojima, Kwansei Gakuin University
Noriyuki Konishi, Aoyama Gakuin University
Akihiro Noguchi, Nagoya University
Norio Sawabe, Kyoto University

5Japanese
ACCOUNTING FORUM 2013
No. 21
CONTENTS
Preface

Yoshihiro Tokuga

Report2012 Annual Conference(1)

Kunio Ito (8)Plenary Session: Identity and Contribution of Accounting Research
Normative Accounting Research: Methodology and Contribution
Yoshihiro Tokuga(10)

Contributions and Limitations of Audit Research and the Prospects for Audit
and Assurance Services
Fumio Naito (12)Accounting Law (Bilanzrecht) and Accounting as Institution
Masao Yanaga(13)

The Challenge for Financial Reporting Against a Global Risk Exposure
Background
Tadanori Yosano (15)Literature of Analytical Accounting Research
Yasuhiro Ohta

(16)

Does Balanced Scorecard Facilitate Decisions?: Cases in Japan
Kentaro Koga

(18)

6

Special Committees
International Convergence of Accounting Standards and Underlying Conceptsof Financial Reporting
Hideki Fujii (19)A Study on Research Methods towards a Contemporary Issue in Auditing
Terumi Takita (21)Subject Research Committee
Fair Value Accounting in Historical Perspective－An Inquiry into the Original Functions of Accounting－Izumi Watanabe (22)Study Groups
A Study on IFRS Education
Kenji Shiba (24)Management Accounting Change through Information Needs Expansion
Hiroyuki Nakamura(26)

A Study on Disclosure and Assurance of Risk Information－Toward Integrated Reporting－

Noriyuki Konishi(27)

Regional Reports
Hokkaido Region

Koichiro Matsumoto(29)

Tohoku Region

Masahiro Shiseki(30)

Kanto Region

Yukio Teruya(30)

Chubu Region

Akihiro Noguchi(31)

Kansai Region

Toshio Kimura(32)

Kyushu Region

Keiichi Oishi

(33)

7

2012 Annual Conference of JAA

2012 Annual Conference
Chairman of 2012 Annual Conference

Kunio Ito
Hitotsubashi University
The 71st Annual Conference of Japan Accounting Association (JAA) was held in
Hitotsubashi University from August 30th to September 1st. The theme of theconference was “Identity and Contribution of Accounting Research.”
Our university hosted the annual conference of JAA about 20 years ago. The
theme was “Retrospect and Prospect of Accounting Research.” The circumstances
have changed dramatically around the academic of accounting after the precious
conference. We could summarize those changes into two trends, “being
cross-disciplinary and being diverse.” We can interpret that these trends have asked
some questions about our identity and contributions to the academies and practices.
Thus we set the theme of the conference “Identity and Contribution of Accounting
Research” and integrated financial accounting, management accounting, and auditing
plenary sessions into one plenary session. The program of the conference wasdeveloped under the concept.
On the first day, the results of the research were presented by two Special
Committees, a Subject Research Committee, and three Study Groups after theCouncil and General Assembly of the JAA. Then Professor Baruch Lev at New York
University presented his research “Accounting Research Makes Significant
Contributions to Investors, Managers, Accountants, and Public Policymakers:The
Record and Future Directions.” We held the welcome reception at Tachikawa Palace
Hotel after them.
On the second day, we had 47 presentations from researchers and Ph.D. students
of Japan in concurrent sessions and 4 presentations from Korean and Taiwanese
researchers in an international session. In addition, we held the plenary session,
combined with financial accounting, management accounting and auditing topics.
Six presentations were held in the morning and discussion was held in the afternoon.
There were many participants in the session and we could discuss the issues andfutures of accounting studies actively and fruitfully.
On the third day, we had 46 presentations from researchers and Ph.D. students ofJapan in concurrent sessions and 3 presentations from Japanese researchers in aninternational session. We also had special sessions of integrated reporting and the8

IFRS. The special session of integrated reporting was held under the panel
discussion. The moderator was Professor Chitoshi Koga at Doshisha University andpanelists were Mr.Hajime Yasui (PwC), Mr. Youichi Mori (JICPA), and Mr.
Nobuyuki Hiratsuka (METI). The special session of the IFRS was held under the
speech. We invited two speakers, Mr. Takatsugu Ouchi, who is the director of the
IASB, and Professor Seok Woo Jeong at Korea University.
There were about 1,000 participants in our conference. There were plenty of
meaningful discussions during the period. I would like to express here our special
thanks to all related personals and parties as a chairman of the host University.

The schedules for 2012 Annual Conference was as follows:
Date and TimeAug 29th

13:00－15:00
15:00－17:30

Aug 30th

10:00－12:00
12:40－13:55
14:05－14:35
14:45－15:15
15:20－16:35
16:45－17:55

Aug 31st

9:30－12:30
13:40－15:50
13:40－16:05
16:15－18:10

Sept.1st

9:50－12:00
9:50－11:30
13:00－14:20
13:15－14:15
14:30－16:30

EventsScreening Committee for Awards
Meeting of Board of Directors
Meeting of Council
General Assembly of Membership
Study Group Reports
Subject Research Committee Report
Special Committee Reports
Special Speech“Accounting Research Makes Significant Contributions
to Investors, Managers, Accountants, and Public
Policymakers: The Record and Future Directions”
Plenary Session -Presentation“Identity and Contribution of Accounting Research”
Concurrent Sessions
International Session
Plenary Session -Discussion“Identity and Contribution of Accounting Research”
Concurrent Sessions
International SymposiumSpecial Session of Integrated Reporting
Concurrent Sessions
Special Session of the IFRS

9

2012 Annual Conference of JAA
Plenary Session:
Identity and Contribution of Accounting Research

Normative Accounting Research: Methodology and Contribution
Yoshihiro Tokuga
Kyoto University
This paper defines normative accounting research and proposes a set of formal
requirements (methodological requirements) necessary for this research. Normative
research includes normative-deductive research (one that draws causal conclusions
logically from a target hypothesis through deductive inference only, with no relianceon empirical evidence) and normative–inductive research (one that demonstrates thegap between a target hypothesis and recursively observed data and provides amethod to reduce the gap. This paper addresses normative–inductive accounting
research (abbreviated as “normative research” below).
A set of methodological requirements is needed to develop a purely normative
discussion (“should be” or “should be done”) into normative research (academic
research). These requirements are (1)the target hypothesis be specified; (2)the facts
within the scope of the target hypothesis be scientifically observed and depicted;(3)the content and size of the gap between the target hypothesis and theobservational data be clarified; (4)causal inference be applied to the gap; and(5)effective and rational steps be defined in order to reduce the gap (mitigation of
the problem) and/or to eliminate the cause(s) (resolution of the problem).
To be viable as a form of academic research (in other words, to have an identity),
this normative research must have its own methodology and evaluation criteria to
discuss the superiority or inferiority of the research. The methodology is set forth
above. In line with this methodology, the following can be established as evaluation
criteria:(1)validity of the target hypothesis; (2)validity of the data observation =choosing the observational object suitable for the target hypothesis and maintaining
observational objectivity (intersubjectivity); (3)validity of the causal inference; and(4)effectiveness and efficiency of the solution approach.
By redefining normative research as a form of academic research, accounting
scholars will be able to contribute not only as scientists to the clarification of thecause-effect relationship among accounting phenomena but also as policy proposers
or assessors to the resolution of accounting problems that occur every day in an

10

economic society.

11Contributions and Limitations of Audit Research and
the Prospects for Audit and Assurance Services
Fumio Naito
Konan University
In my presentation, I mainly discussed (1)the identities of audit research, (2)thelimits and contributions of audit research in economic society, and (3)the nature ofaudit research aimed at overcoming such limitations.
Firstly, I noted that we can find the identity of audit research in the diversity ofthe objects and methodologies of the research.
Secondly, I explained that the audit research in Japan was originally exclusively
normative one on the accounting audit systems and that since 2000, empiricalresearch, or experimental works on the informational value of audit opinions and theeconomic implications of the audit system have been developed or completed. There
are no objections by the researchers to the fact that the audit research has contributed
to the development of disclosure systems through the improved audit systems.
Finally, I explained my view that there is a limited existing research in terms ofthe generality of the basic concepts of auditing, such as a fair presentation offinancial statements, obtaining objective evidence, and assurance of audit contents.
In addition, because of the lack of operability and the generality of the concepts, weare not able to ascertain the quality of the outcome of an audit as an economic
service from a micro-perspective, and it is not possible to measure the social
contributions of audit systems from a macro-perspective.
Therefore, I emphasized the need for the following prospective audit andassurance services research:
1. Research to explore the development of a methodology of auditing. There iscurrently a difficulty in obtaining raw materials and detailed data of auditor’s
decision making in the audit, but this difficulty can possibly be overcome throughinvolved field work.
2. Research that addresses the transformation and expansion of audit objectives.

12

Accounting Law (Bilanzrecht) and Accounting as Institution
Masao Yanaga
University of Tsukuba
When the Commercial Code was (hereinafter referred to as the Code) amended in
1962 in order to harmonize with the “Business Accounting Principles (kigyo kaikei
gensoku)” and a blanket provision requiring merchants to take “fair accounting
practices” into consideration was introduced into the Code in 1974, lawyers, law
academics as well as the Ministry of Justice (MoJ) had not necessarily put absolute
trust on the opinions promulgated by the Business Accounting Deliberation Council(BADC). The Report of the Study Group on the Relationship between the Code andBusiness Accounting (on behalf of the MoJ and the Ministry of Finance) of 1998,
however, pointed out that the “Business Accounting Principles” is the principal
source of the “fair accounting practices” in the meaning of the Code. According to
the Report, calculating proper distributable profits is one, providing useful
information is another. The Report presented a view that a company should choose a
specific accounting treatment required in an opinion of the BADC if it is consideredas the unique “fair accounting practice”.
Under the Companies Act 2005, “business accounting practices generally
accepted” govern the accounting of a company, with the idea a step further, being
able to decouple the regulation on distribution and that on information disclosure.
The theory and practice of financial accounting as well as the accounting standards
developed by the Accounting Standards Board of Japan (ASBJ) have become more
important than ever for the interpretation of statutory rules (de lege lata) and thedevelopment of statutory rules (de lege ferenda). The role of the auditor andaccounting practitioners as well as accounting academics in the formation anddiscovery of business accounting practices generally accepted has been growing.
Now, to study accounting system, he/she would reveal what should be the generally
accepted accounting and disclosure principles, disregarding the constraints of theexpress provisions of statutes.
On the other hand, under the Companies Act 2005, the statutory auditors (kaikei
kansanin) are required to present an overall opinion (the financial statements of theCompany present fairly, in all material respects, the financial position of theCompany as of the end of the business year and the results of its operations for theyear then ended in accordance with generally accepted accounting practices), in
contrast to the individual opinions expressed under the Code (before theamendments in 2005). Therefore, it is necessary to clarify the meaning of “present
fairly” with respect to the Companies Act. In this respect, the input based the study
conducted by the academics and/or the practices of auditors to legal interpretations13

is indispensable.

14

The Challenge for Financial Reporting
Against a Global Risk Exposure Background
Tadanori Yosano
Kobe University
Information technology has led to the development of new goods and services
which supplement the traditional goods and services. A great amount of skill andtalent are required to operate the necessary technology to process information for
creating new goods and services. There is a high uncertainty for future benefits withthese new resources that is amplified, and the informational society pushes
companies to transition to a high uncertainty value creation method. In fact, wefound that this transition has expanded the horizons of the profitability distribution(ROA) for all listed companies in Japan since 1978. Lev (2001) asserted that despite
the degree of future uncertainty both non-financial and financial resources should bebalanced and reported. On the other hand, integrated reporting states that probablefuture benefits should be on the balance sheet as financial resources, and uncertain
non-financial resources should be presented with a narrative explanation and KPI(Key Performance Indicator) as a supplement to the financial statements. Instead ofincorporating all resources on one report, the integrated reporting method proposes
the following: (1)A company discloses the outcomes of an investment that are
non-financial, such as a business plan for the medium to long term, (2)Information
regarding the investment outcome, despite the level realized or uncertain, should be
disclosed in a narrative description and KPI (Key Performance Indicator). This
allows highly uncertain benefits as non-financial information to be included with thebusiness model and strategy, and leaves the highly certain benefits as financial
information.
The proper disclosure juxtaposed with the company’s business model and strategy
will facilitate an understanding of the future uncertainty amongst stakeholders. In
fact, the accumulation of highly uncertain non-financial resources and risk control
practices and preventative measures will all incur more financial costs. Financial
reporting can become more flexible in an environmentally changing system by
disclosing non-financial indicators, narrative descriptions, and incorporating
probable future benefits.

15

Literature of Analytical Accounting Research
Yasuhiro Ohta
Keio University

Even in the Japanese Accounting Research Community, which is known for its
conservatism, empirical studies that ascertain hypotheses with data are becoming
increasingly prevalent. In addition to capital market studies in which hypotheses aretested with market and financial data, experimental psychological or economic
studies in which laboratory experiments are conducted are gradually increasing.
Although the hypotheses tested in empirical studies are underpinned by economic
intuitions, they are built on literal reasoning with natural languages. However, literalreasoning may not be sufficient to construct research hypotheses that can be
empirically tested.
The occurrence of an economic event often depends on other economic factors.
Thus, the sign of a coefficient for an independent variable in a regression model may
depend on the levels of other independent variables. Accordingly, literal reasoning
enables the explanation of the positive and negative coefficients for an independent
variable when the sign of the coefficient depends on other economic factors. Literalreasoning is not eligible to be a “theory” that underpins the hypothesis tested in suchan empirical study; instead, a mathematical model analysis is needed to identify thefunctional form that explicitly specifies the relationship between the dependent
variable and independent variables. In accounting, mathematical model analyses andtheir results are collectively called “analytical accounting research” or “accounting
theory.”For instance, consider the resource allocation problem between analytical andempirical accounting research. In a plausible setting, if the marginal productivity of
empirical research when no analytical research exists is greater than that ofanalytical research when no empirical research exists, the resources allocated toempirical research are likely to exceed those allocated to analytical research.
However, if the complementarity between analytical and empirical research goes topositive infinity, the optimal resource allocation is to evenly divide resources
between the two types of research. The fact that most resources are currently
allocated to empirical research suggests that either optimal allocation is not attainedor collaboration between analytical and empirical research is not sufficient inaccounting.
The second example is the accounting conservatism that emerges as an optimal
choice by the principal in a moral hazard model with a binary choice, binary signal,
limited liability, and management compensation cap. In the model, more profitablefirms, larger firms, and firms with higher variability in their management
16

compensation tend to adopt more conservative accounting systems. Firms in which
the managers’ cost of exerting effort is greater tend to adopt less conservative
accounting systems. Some of the associated analytical results can be tested
empirically.
The final example is from strategic auditing (game theoretic analysis of auditing).
In strategic settings where strategic interactions among players are important,comparative results can differ from those in the single-person decision-theoretic
settings. If an audit client has a sufficiently strong incentive to commit fraud or theauditor has a sufficiently strong incentive to avoid false rejection, audit riskincreases when the auditor obtains additional information. This kind of phenomenon
is not predicted in decision-theoretic settings. It is an empirical question for which
the prediction is consistent with the evidence.

17

Does Balanced Scorecard Facilitate Decisions?: Cases in Japan
Kentaro Koga
Hitotsubashi University
In its decision facilitating function, the accounting information often does not
identify the best decision because the accounting information allows more than one
interpretations. Balanced scorecard narrows the range of the interpretations byverifying the cause-effect relationships through the financial and non-financial
measures. Furthermore, the interactive control, the group innovation process thatcombines the tacit knowledge from various business functions, helps the manager
reach the most reasonable interpretation and, consequently, the best decision. Social
psychology studies explore brainstorming that resembles the interactive control,
however, to find that brainstorming hinders creativity, not enhance it. Finally, themanagers prefer to make decisions inducing from their subjective experiences rather
than deducing from the objective accounting information. As such, the balanced
scorecard upon interactive control must satisfy several conditions in order tofacilitate the managers’ decisions effectively: group composition from diverse
backgrounds; a specific and challenging goal; the disclosure of the decision process;outsider assurance of the balanced scorecard measures; and employees’ involvementin the balanced scorecard design. In the cases of Japanese firms that implementbalanced scorecard, all the four firms use the balanced scorecard to influence thedecisions but only one to facilitate the decisions. This firm operates in the retailindustry in which the cause-effect relationships are simpler than the other industries.
In addition, the firms’ CEO and CFO make the decisions jointly mitigating thenegative effects of brainstorming. Lastly, the CFO had to rely on accounting
information more than his experiences because of the short tenure in the firm. The
four cases imply that the balanced scorecard upon interactive control facilitatesdecisions effectively in a particular context but not always.

18

2012 Annual Conference of JAA
Special Committee

International Convergence of Accounting Standards
and Underlying Concepts of Financial Reporting
Chair: Hideki Fujii
Kyoto University
Our study aims at reconsidering on a current nature and a possible futureorientation of the international convergence of accounting standards, with specialreference to underlying concepts introduced and/or redefined in the improved
conceptual framework for financial reporting published by the IASB and FASB in2010. Our final report wraps up the second year results of our research project from2011 to 2012, and consists of 9 chapters. Their general outlines are as follows.
After showing our research interests in the 1st chapter, we analyze conceptualchange in financial reporting in the light of its economic resource allocation functionin the 2nd chapter. Our investigation shows that the dominance of institutional
investors in financial markets has needed fair value measurement that puts market
information directly into accounting, which has substantial impacts on economic
resource allocation in reporting entities.
The 3rd chapter investigates into the implications of the shift from Revenue andExpense View to Asset and Liability View for the double-entry bookkeeping system.
We arrive at the remarks that under this shift of fundamental view of accounting, we
would need to rebuild a whole structure of the accounts if we would maintain thefunctions of recording and income determination fulfilled by bookkeeping system sofar.
In the 4th chapter we discuss the change in the objectives of financial reportingand qualitative characteristics of accounting information in the SFAC No.8. Ourinterpretation is that the progressive penetration of fair value into accounting
measurement would have bought about the elimination of the “stewardship” fromthe objectives on one hand, and the replacing “reliability” with “faithfulrepresentation” as a primary characteristic on the other.
In the 5th chapter we inquire into current trends in enlargement of the accounting
recognition. These trends can be characterized as an enlargement of the scope of therecognition and a bringing the timing of recognition forward. But, because of thelack of reliability of information thus recognized, the trends should not be going
forward freely and be constrained by certain traditional accounting concepts likerealization.
19

Generally, we have two ways to provide financial information to users; one is to
put information in financial statement, i.e., recognition, and the other in footnotes,
i.e., disclosure. In the 6th chapter literature review shows us that as dealing with theissue, we should consider the nature of targeted investors and level of reliability of
information, but we cannot decide which of the two would be better at this point intime.
In the 7th chapter we review the due process documents about the reporting entity,
which is the topic showing for the first time in conceptual framework project. We
point out the raisons why the topic came to be discussed in the project; i.e., to clarify
the relationship between reporting entity and prior agendum in conceptual
framework, and to solve the fundamental problems in the framework.
The value relevance of income numbers are always one of the main focuses inaccounting research. In the 8th chapter we conduct an empirical test of the value
relevance of net income and other comprehensive income in Japanese market. Our
empirical results shows us that for following 60 days after the settlement of accounts,
net income keeps strong impacts on the stock prices, while the value relevance ofother comprehensive income is not statistically significant.
In the final chapter, we summarize our two-year research activities and remark
future possible development of the research.

20

Special Committee

A Study on Research Methods towards a Contemporary Issue
in Auditing

Chair: Terumi Takita
Doshisha University
There are many research methods in auditing. But especially in Japan, there is nometa analysis comparing them. The objective of this committee is twofold: first, toexamine the methodological characteristic of research methods (analytical research,archival research, experimental research, and normative research), and second, tobuild a framework enabling a comparative analysis of research methods through aconcrete issue in auditing.
In this first year, we focused on the former objective, and we were divided into
four sections: analytical research, archival research, experimental research, andnormative research. So our interim report includes 4 parts after our research interestsin the 1st chapter.
Part 1: an analytical research in auditing (from chapter 2 to 4)
Part 2: an archival research in auditing (chapter 5)
Part 3: an experimental research in auditing (from chapter 6 to 8)
Part 4: a normative research in auditing (chapter 9)
In the second year, we will focus on the later objective; to build a framework
enabling a comparative analysis of research methods through a concrete issue (e.g.
internal control) in auditing.
Committee members:
Masayuki Ueeda (Aoyama Gakuin University), Yasuhiro Ohta (Keio University),
Shinya Okuda (Osaka Gakuin University), Atsushi Shiiba (Osaka University),
Terumi Takita (Chair, Doshisha University), Satoshi Taguchi (Doshisha University),
Yasuhide Harada (Shitennoji University), Kenichi Yazawa (Aoyama Gakuin
University), Kotaro Yabe (Osaka University of Commerce), Tadanori Yosano (Kobe
University)
Research Collaborators:
Fumiko Takeda (University of Tokyo), Kunihiro Shimazu (Kobe University)21

2012 Annual Conference of JAA
Subject Research Committee

Fair Value Accounting in Historical Perspective－An Inquiry into the Original Functions of Accounting－
Chair: Izumi Watanabe
Osaka University of Economics
The purpose of this Committee is to reexamine the relationship between themarket value and the discounted present value, which form the basis of fair value
measurement, and the original role of double-entry bookkeeping. The reexamination
is aimed at the problems encompassing modern accounting from the perspective of
measurement to find what constitutes truly useful information with respect to thepresently overused decision-making usefulness approach.
The following points were the focus of our efforts. First, we place the focus on thebasic function of fair value, the measurement method of the Asset and Liability
View now conquering modern accounting, along with the history behind its
appearance, and indicate the current status, themes and problems of fair value
accounting. Next, we show just when in history the measurement of current value,
which is the specific measurement attribute of fair value, took the stage and pointout the discrepancies of current value when used in today’s fair value accounting, as
well as the various aspects where they deviate. Based on this point, we examine theproblems facing today’s overemphasized usefulness approach for decision making,comparing it to accounting’s true nature.
Our Committee aims to find (1)what role was double-entry bookkeeping invented
to fulfill, (2when current value measurement appeared, (3)what is the relationshipbetween current value measurement and acquisition cost valuation and discounted
present value from a historical perspective, and finally (4)sound a warning bell from
history with regard to the overuse of the usefulness doctrine (excessive importanceplaced on the Asset and Liability View), expose the distortions of modern
accounting and the problems with accounting concepts that overemphasize the Assetand Liability View, and lastly indicate the dangers lurking in the path of modern
accounting.

22Section I: Status and Aspects of Fair Value Accounting
Chapter 1: Basic Accounting Function and Fair Value Accounting
・・・Toshihumi Matumoto
Chapter 2: Advent of Fair Value Accounting and
Its Historical Background・・・・Noriaki Miyatake
Chapter 3: Current Status and Issues ofFair Value Accounting・・・・・・・Toshitake Miyauchi
Chapter 4: Conflict in Fair Value Accounting－The Spell ofRealization Principle－・・・・・・・・・Norio Takasu

Section II: Verification of Fair Value Accounting from the Historical Perspective－From Current Value to Fair Value Measurement－
Chapter 5: Current Value Measurement in the Seventeenth Century
・・・Takeshi Sugita
Chapter 6: Appearance of Current Value Measurement in Eighteenth Century
Britain・・・・・・・・・・・・・・・・・・・Izumi Watanabe
Chapter 7: Significance of Current Value Information in NineteenthCentury England Corporate Accounting-Statute Companies
and General Registered Companies・・・・・・・・・Shigeto Sasaki
Chapter 8: Evolution of the Thought of Professional Auditors on Assets
Verification during the Period 1880-1940: in the UK Practices
・・・・・・・・・・・・・・Kei Okajima
Chapter 9: Classical Inflation Accounting andFair Value Measurement ・・・ Hideki Kubota
Chapter 10: Various Aspects of Divergence from Fair Value Accounting in History－Actual Requirements for the Application ofMarket Value Accounting－・・・・・・・・・ Takemi Ono

Proposal: Warning from History against the Excessive Leverage of Usefulness
Approach・・・・・・・・・・・・・・・・・・・・・ Izumi Watanabe

23

2012 Annual Conference of JAA
Study GroupA Study on IFRS Education
Chair: Kenji Shiba
Kansai University
1 Based on the interim report made at the 70th Congress (September, 2011, Kurume
University), we made a final report at the 71st Congress (August, 2012, Hitotsubashi
University). In the interim report, we collected information about the current state of
IFRS education, the importance of historical considerations regarding IFRS
education and related issues and the basic concepts necessary for IFRS education, as
the basic research in relation to the research subject.
2 The final report, although it is based on the interim report, it is a new challenge inaccounting education. First, we decided to show a systematical framework foraccounting education in order to make discussions about it more active. Secondly,
we showed IFRS principles in a style similar to the accounting principle for businessenterprises in our country. That is, showing the basic points of view in accounting
education on one hand, and then making concrete ways to approach IFRS on theother.
In addition, we extracted lessons from practical examples of IFRS related
education. In other words, we analyzed in the third place, the IFRS teachingmaterials which are proposed in IAAER and IASB, in 4th place the materials used in
the university and graduate school in the USA, and in 5th place, the cases in
education at Japanese university and graduate schools and also corporations to
extract a lesson. In the 6th place, we attempted to lecture on one semester forintermediate students in accounting at the graduate school, and extract a lesson fromthis place, too. By having a frontier spirit and practicing an approaching method, we
decided to pose a problem in our country’s accounting education.
3 Summary
Chapter 1 (proposal):“A tentative plan of the Framework for Accounting
Education”
The purpose of accounting education is to bring up people who understand theessence of accounting that is properly functioning in the present economic society,and thus, contribute to further development of the economic society. The IFRS
education must be implemented as part of the whole accounting education.
24

Chapter 2 (proposal):“New Accounting Principle for Business Enterprises
tentative plan ( IFRS version)”
If IFRS could be made compact like “Accounting Principle for BusinessEnterprises” and moreover systematically gathered, it would be more convenient forteaching and learning. We created the “New Accounting Principle for BusinessEnterprises tentative plan (IFRS version)” to show such teaching materials andpropose a way in IFRS education.
Chapter 3 (case study):“Analysis of IFRS teaching materials by IAAER and
IASB”
Chapter 4 (case study ):“Actual situation of IFRS education in the USA”
Chapter 5 (case study ):“Actual situation of IFRS education in our country”
Chapter 6 (case study):“Attempts to give lectures in Kansai University”
From chapter 3 to chapter 6, a lot of cases are introduced. Due to space
restrictions, it isn't possible to introduce them, but I recommend you to refer to thefinal report. From these case studies, it is possible to say that results can be achieved
if efforts are accomplished respectively by teachers and students.

Chair:
Kenji Shiba (Kansai University)
Members:
Nobuhiko Sato (Meiji University)
Takeo Itabashi (Meiji University)
Sadako Inoue (University of Marketing and Distribution Sciences)
Junko Saino (Konan University)
Tomomi Shiosaki (Hiroshima City University)
Motoko Shoji (KPMG AZSA LLC)
Tokuei Sugimoto (Kwansei Gakuin University)
Meiling Sun (University of Marketing and Distribution Sciences)
Noriyuki Tsunogaya (Kyushu University)
Satoshi Tomita (Kansai University)
Akiko Fujita（Meiji Gakuin University）
Aki Yamauchi（Waseda University）
Yasuhiro Yamada（Shiga University）

25

Study GroupManagement Accounting Change throughInformation Needs Expansion
Chair: Hiroyuki Nakamura
Yokohama National University
Management accounting has been continuously changing by many factors. This
Study Group focuses on the relationship between information needs andmanagement accounting.
In this research, we deal with three critical research issues. First, we propose ananalytical model to explain management accounting change through informationneeds expansion. Second, we administer a questionnaire survey and conduct
interviews about management accounting practices in Japanese companies to
identify management accounting changes through information needs expansion.
Third, we show the essence of management accounting for the future.
In the interim report, we showed an analytical model for management accountingchange as a result of our research project. Based on this analytical model, eachmember of our study group showed research results of related readings.
In the final report, we show the result of questionnaire survey to Japanesecompany and some cases of Japanese companies. These cases include Asahi Yukizai,
Toshiba, Kao, Sony and Toyota. These suggested us many meaningful insights about
management accounting change. In the interim report, we verified that management
accounting changed through information needs expansion. Based on these cases, wefind that the information needs expand from internal and external factors. We show
concretely the management accounting change in relation to these information needs.
Especially, we show these changes dynamically based on our analytical model.
Management Accounting has developing in accordance with business practice.
Management accounting research must keep pace with this practice more from now
on. This ensures and promotes the development of management accounting.

Committee members; Masaru Takahashi (Yokohama National University), Tetsuhiko
Ogawa (Saga University), Yumi Morofuji (Rikkyo University), Masahiko Sakai(Otaru University of Commerce), Masanao Kanetoh (Hirosaki University), Asako
Kimura (Kansai University), Nobuyuki Mochiduki (Prefectural University of
Kumamoto), Yukihiko Okada (Tsukuba University), Mikiko Kimijima (Kanagawa
University)
26

Study GroupA Study on Disclosure and Assurance of Risk Information－Toward Integrated Reporting－
Chair: Noriyuki Konishi
Aoyama Gakuin University
The objective of our Study Group is to reconsider financial reporting in terms ofrisk and consider the disclosure and assurance of risk information. The first point of
this study is that risk is the key concept which combines organically financial
statements with nonfinancial information. In International Financial ReportingStandards, the risk included asset and liability should be recognized and measured
by use of expected cash flow technique. However, because the risk information
doesn’t always be presented by amounts in the financial statements immediately,
descriptively risk which cannot be measured in the financial statements may disclose
as nonfinancial information.
Although the risk information should be combined organically to interrelate withother risk information, it is disclosed separately in financial reporting. As a result,the information users have no choice but to incur unnecessary cost for their analysis.
Therefore, the second point of this study is that we would consider whether an
integrated disclosure of risk information is possible or not, on the assumption that
preparing an integrated reporting as a strategy for making improvements a matter ofrisk information disclosure. To interpret the principle of stakeholders’ behavior
about risk information, we would verify what factors define the contents andmanners of risk information disclosure, and how they influence the principles. Also
we would discuss whether risk information is intended an assurance provided
by auditors and if so, what level of reliability or credibility is provided.
We discussed the nine issues in an interim report; (1)Noriyuki Konishi, “A
Importance of Risk Information Disclosure － The Purpose of the Study － ,”(2)Hidetsugu Umehara (Chuo University), “Accounting Recognition of Intangibles－A Fair Value View－,” (3)Kazuhisa Otogawa (Kobe University), “Disclosure of
Quantitative Market Risk Information in Commercial Banks,” (4)Hyon Ok Kim(Tokyo Keizai University), “Business Risk Disclosure in Pharmaceutical,”(5)Takashi Asano (Tokyo Metropolitan University), “Verifying the Credibility of
Forward Looking Information － A Test of the Confirmation Hypothesis － ,”(6)Yoshihiro Machida (Aoyama Gakuin University) and Hironori Fukukawa(Hitotsubashi University), “The Risk Concept in Auditing Standards,” (7)Yoshihiro
Machida, “Assurance Engagements in Financial Reporting Systems in Japan,”27

(8)Masaki Yoneyama (The University of Tokyo), “Viewpoint to be Adopted inAnalyzing Content of Risk Information,” (9)Noriyuki Konishi, “The Roles andChallenges of Integrated Reporting－Progress of the Integrated Risk Information－.”
It is stated that enhanced information about what companies do to assess andmanage key business risk will (1)provide practical forward-looking information,(2)reduce the cost of capital, (3)encourage better risk management, (4)help to ensure
the equal treatment of stakeholders, and (5)improve accountability of management,
investor protection and the usefulness of financial reporting. Risk information
disclosure is becoming an integral part of a financial report. In our study of next year,
we would like to discuss the relations between disclosure and assurance of risk
information.

28

2012 Annual Conference of JAA
Regional Reports

Hokkaido Region

Koichiro Matsumoto
Hokusei Gakuen University

The regional meetings were held in 2012 as follows.
1. The 81st Regional Meeting at Hokkai-Gakuen University on 19 May, 2012.
(1) “The Transition of Investors' Decision Making against Japanese Tax Reformin 2009, Part2,” Tadashi Sugimoto, Hokkaido University (Doctoral
Candidate), Yuzuru Sakurada, Hokkaido University and Yoshiyuki
Nakanishi, Hokkaido University (Doctoral Candidate).
(2) “Cash Flow and Double-entry Bookkeeping: Possibility of the Expansion as
Causal Double-entry Bookkeeping,” Chutoku Chin, Sapporo University.
(3) “Stock Market Integration and Disclosure of Accounting Information,” Koki
Hamada, Kushiro Public University of Economics.
2. The 82nd Regional Meeting at Hokkaido Citizens Actives Center on 23
November, 2012.
(1) “The Japanese Accounting Treatment of Changes in Ownership Interestsfrom Sale of Additional Shares by a Subsidiary,” Masako Futamura, Otaru
University of Commerce.
(2) “Demand-Cost Analysis of Tourism Area,” Rie Hashimoto, Hokkai Schoolof Commerce.
(3) “Study of Generally Accepted Accounting Principles for Small Companies,”
Shigeyuki Nakashima, Hokkai School of Commerce.
(4) “The Revised Accounting Standard of Social Welfare Organizations (2011)
and Things to Do,” Kenzo Nakagawa, Professor Emeritus, Hokusei Gakuen
University.

29Tohoku Region
Masahiro Shiseki
Aomori Public College
In 2012, following meetings were held.
1. The 82th Meeting, July 21, 2012 at Fukushima College Ekimae Campus(1) “Investigation of Plural Value Concepts in Assets”
Shuko Naito, Hirosaki University(2) “On Entry and Exit Regulation in Accounting for Income Taxes”
Shuhei Kinugawa, Fukushima University(3) “A Study on the Possibility of Introducing Balanced Scorecard in the Apple
Industrial Cluster”
Masanao Kanetoh, Hirosaki University
Ittetsu Iwata, Hirosaki University(4) “Economic conditions of SMEs in the Tohoku Region after the passage of
one year from the Great East Japan Earthquake”
Tomohiro Kaneko, Iwate Prefectural University
2． The 83th Meeting, November 17 and 18, 2012 at Hotel Akitaya in Asamushi
Onsen(1) “Study of Management of a Local Government Hospital”
Yoshimi Iwasa, Aomori Public College(2) “Necessity of Business Continuity Planning For Company in Disaster”
Tomoko Okano, Ishinomaki Senshu University

Kanto Region
Yukio Teruya
Kanagawa University
The 60th Kanto regional meeting was held at Kanagawa University on December
1st, 2012.
The main theme of the meeting was “The Check and Evaluation of‘the Quality’30

of Accounting in Japan.” Discussions were coordinated by Kikuya Masato at Hosei
University.
The following reports and panel discussions were presented.
(1) “The Check and Evaluation of ‘the Quality’ of Accounting Theory: from theview of Financial Disclosure,” Masaki Yoneyama at Tokyo University．
(2) “The Check and Evaluation of ‘the Quality’ of Accounting Standards: fromthe view of Adoption of IFRSs,” Kenichi Akiba at Waseda University．
(3) “The Check and Evaluation of ‘the Quality’ of Management Accounting:from the view of Corporate-Reputation,” Michiharu Sakurai at JousaiInternational University．
(4) “The Check and Evaluation of ‘the Quality’ of Accounting Audit: from theview of Coping with Illegality,” Yoshihiro Machida at Aoyama Gakuin
University．

Chubu Region
Akihiro Noguchi
Nagoya University
The regional meetings were held as follows;
1. The 129th Regional Meeting at Fukui University of Technology on June 30, 2012.
(1) “Methods for Incorporating IFRSs and Comparability of Financial
Information,” Izumi Washizu, Chubu University.
Discussant: Hideiti Okazaki, University of Fukui.
(2) “Accounting Information and Equity Valuation,” Kazuhiro Manabe & Masaru
Chiba, Fukui University of Technology.
Discussant: Motonobu Tokumae. Fukui Prefectural University.
(3) “Economic Analysis on Goodwill and Synergy,” Satolu Nishiumi, Aichi Gakuin
University.
Discussant: Takehiko Moriguchi, University of Toyama.
2. The 130th Regional Meeting at Aichi University on December 1, 2012.
Research Paper Presentation:“Direction of the Definitions and Recognitions of the Elements of Financial
Statements,”Noriyuki Ikeda, Aichi University.
Plenary Session:(Guest CPA Speaker)
31

“For the Growth of Japanese Enterprises: Changes in Accounting and Auditing,”
Satoko Nakatani, Tokai Chapter of JICPA.
(Guest Academic Speaker)“Financial Statement Audit as Social Existence,” Ryuuichiro Kurihama, Aichi
University.
http://www.soec.nagoya-u.ac.jp/~noguchi/chubu/english.htm

Kansai Region
Toshio Kimura
University Marketing and Distribution Sciences
The 62th Kansai Region Meeting was held at University Marketing andDistribution Sciences on December 8 2012. The Meeting had open sessions and aplenary session.
In open sessions, the presentations were as flows:(1) “Fair value of human resource and point of argument on tax regulations,”
Kazuyuki Shimanaga, Kobe Gakuin University(2) “From Chines view to Principles-based vs. Rules based Accounting,” Iku Oh,
Kwansei Gakuin University(3) “Reviews of Accounting Information － the application Management
Accounting to Local Government,” Satho Kan, Hiroshima University(4) “Abolition and Next of Definite Settlement of Accounts in German,” Hideki
Kubota, Konan University
The Main theme of the plenary session was “Map and Territory in Using Financial
Information.” Discussion was moderated by Hideki Fujii, Kyoto University. The
presentations and panelists were as follows:(1) “Accounting Estimates of Management and the Usefulness of Accounting
Information,” Tomoyuki Murata, Konan University.
(2) “Reaction of Investors to Enhancing Disclosure of Interim Financial
Information,” Katsuhiro Nagashima, Osaka University of Economics.
(3) “Theory and Evidence Using Audit Information on the Audit Quality Driver,”Nobuhiro Asano, Osaka City University.

32

Kyushu Region
Keiichi Oishi
Kyushu University
The Japanese Accounting Association (JAA) Kyushu regional conferences are
regularly held twice a year - in July and March. This academic year, the summer
conference was held at Saga University, and the early spring conference was held at
Kyushu University.
1. The 90th meeting at Saga University, on 14th July, 2012.

(1) “A study on the establishment process of Accounting Standards Board in theUK,” Yuki Okamura, Kyushu University.
(2) “The Net Profit and Comprehensive Income: From the Viewpoint of Earning
Concepts,” Isamu Iwasaki, Kyushu University.
(3) “A Study of Accounting Standards for SMEs in Japan,” Toshifumi Yamashita,
Saga University.
2. The 91th meeting at Kyushu University, on 23rd March, 2013.
(1) “A Study of Accounting Systems Development:
From the Viewpoint of ‘The Economics of Transition,’” Wei Wei, Kyushu
Sangyo University.
(2) “New Accounting Standards and Dividend Calculation under Commercial
Code and Companies Act,” Mikiko Shin, Kyushu Joho University.
(3) “Recent Trend and Problems of Target Costing in Case of A Shipbuilding
Company: Including Trend of Shipbuilding Industry in Korea,” Kosuke Miyaji,
University of Nagasaki.

33