December 17, 2012
Ms. Yael Almog
Executive Director
The IFRS Foundation
30 Cannon StreetLondon EC4M 6XH
United Kingdom
Re: Invitation to Comment “Proposal to Establish an Accounting Standards AdvisoryForum”
Dear Yael,
The Accounting Standards Board of Japan (ASBJ) appreciates the opportunity tocomment on the Invitation to Comment “Proposal to Establish an Accounting Standards
Advisory Forum” (hereafter, “ITC”). The ASBJ supports the establishment of theAccounting Standards Advisory Forum (ASAF), as it believes that the creation of theforum will foster the effective and efficient functioning of the IASB’s deliberation
process by formalising the relationship among the IASB and national standards setters(NSSs) and regional bodies.
Over recent years, the ASBJ has proactively participated in the global debate on thedevelopment of a single set of global high quality standards through a variety of means.
For example, the ASBJ has had biannual bilateral meetings with the IASB, and has
participated in regional and international forums (such as, IFASS, AOSSG, WSS
meetings) in a proactive manner.
Further, since the fiscal year beginning April 2009, application of IFRSs has beenpermitted for the preparation of consolidated financial statements for selected Japanesecompanies. The number of companies that opt to use IFRSs (as designated) has
steadily increased since then, and we anticipate that the number of companies willcontinue to grow. In enforcing the voluntary application of IFRSs, the legislation
empowers the Financial Services Agency to examine and designate each IFRS, andcurrently all IFRSs are designated without modification. You may also be aware thatduring the process of making a submission to the IASB for its Agenda Consultation1

2011, the ASBJ had an intensive discussion with Japanese stakeholders, and submitted
its comment letter which recommends that the IASB reconsider several requirements ofindividual IFRSs for the betterment of existing IFRSs.
For our responses to specific questions in the ITC, please see the following.
Question 1—Do you agree with the proposed commitments to be made by ASAF
members (paragraph 6.4) and that they should be formalised in a Memorandumof Understanding (paragraph 6.5)? Why or why not?
In our view, the wording of the proposed commitments in paragraph 6.4 of the ITC
should be amended to promote the better functioning of the ASAF. As rightfully
pointed out in the parenthesis of the paragraph 6.4 (4), jurisdictions are at different
stages in moving towards IFRSs. Therefore, using words that might imply some
restriction on the liberty of participating members when exercising their discretion on
the basis of their mandate in the national (or regional) settings, would be inappropriate.
Specifically, we suggest modifying the paragraph 6.4 (4) to instead state "making thebest effort to promote endorsement/adoption of IFRSs, which would have been improvedthrough advices and other activities being conducted by the ASAF over time(recognising that, at present, jurisdictions are at different stages in moving towards
IFRSs and have adopted different mechanisms to achieve this).”As mentioned in our general comment, we submitted our comment letter to the IASB’s
Agenda Consultation 2011 for the betterment of IFRSs. We expect that the initiativesof the ASAF will be instrumental in the improvements of IFRSs, thereby contributing tothe greater acceptance of IFRSs in each jurisdiction. Thus, we would like to provideour proactive contribution to the ASAF’s activities for promoting its effectivefunctioning.

Question 2—The Foundation believes that, in order to be effective, the ASAF needs
to be compact in size, but large enough to allow for an appropriate global
representation. Do you agree with the proposed size and composition as set out inparagraphs 6.7–6.13? Why or why not?
We believe that the ASAF should be a venue where the effective interaction between
ASAF members and IASB members takes place, rather than the place where the IASB
merely receives inputs from ASAF members. In light of such envisaged function, we2

agree with the proposed number of members (twelve) as suggested in paragraph 6.7 ofthe ITC, taking into account that some IASB members and its staff (in addition to theIASB Chair and Vice-chair) will participate in the discussion.
We also support the factors set out in paragraph 6.11 of the ITC that are used inselecting and reviewing the membership of the ASAF (e.g., technical competence, thescale of the jurisdiction’s capital market, the organisation’s contribution to the IASB’sstandard-setting process and the degree of human capital resources available to theorganisation), as they are critical in fulfilling the mission of the ASAF. We feel thatgiving transparency to the factors to be considered in the member selection process will
help the IFRS Foundation and the IASB in discharging their responsibility to beaccountable for selection of the membership in an objective and fair manner.

Other Comments
Paragraph 6.20 of the ITC suggests that agenda papers for each meeting be prepared by
IASB staff or ASAF members. We welcome this proposal, as preparation of agenda
papers by ASAF members will promote effective debate by enabling ASAF members tocommunicate their issues or views in a more precise manner.
In addition, paragraph 6.21 of the ITC outlines the process of how ASAF members canprovide quality inputs to the IASB. Although such a process is important, it is equallyimportant to clarify how the IASB provides feedback to ASAF members about how
their views are considered in its standard setting process, having regard to the equal
relationship between them. Providing such feedback would be critical, when an
important input at the forum has not been reflected in the IASB’s standard setting
process.

We look forward to continuing to provide contributions to IASB’s standards setting
activities.
Yours sincerely,

Ikuo Nishikawa
Chairman of the Accounting Standards Board of Japan3