Japanese

ACCOUNTING FORUM2012

No. 20JAPAN ACCOUNTING ASSOCIATION

Japan Accounting Association.
Liaison Office: Hayashi Building, 1-10 Kanda Nishiki-cho, Chiyoda-ku,
Tokyo 101-0054, Japan
Copyright© 2012, Japan Accounting Association

Japanese ACCOUNTING FORUM 2012
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 2012is the 20th issue of Japanese ACCOUNTING FORUM.
This issue contains the summary of presentations at the 70th Annual Conferenceof JAA which was hosted by Kurume University in Fukuoka on September 17-19,
2011. It also includes the reports of regional activities of JAA during the 2011
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 602-8501, JAPAN
tokuga@econ.kyoto-u.ac.jp

1

JAPAN ACCOUNTING ASSOCIATION

Board of Directors (2012)
President:
Kazuo Hiramatsu,

Kwansei Gakuin University

Directors:
Kouji Ishiuchi, Kurume University
Tadashi Ishizaki, Chuo University
Kunio Ito, Hitotsubashi University
Kiyotaka Ueno, Chuo University
Akitomo Kajiura, Kwansei Gakuin University
Koji Kurata, Rikkyo University
Yoshinao Kozuma, Sophia University
Shizuki Saito, Meiji Gakuin University
Nobuhiko Sato, Meiji University
Kenji Shiba, Kansai University
Yoshihiro Tokuga, Kyoto University
Fumio Naito, Konan University
Toshiro Hiromoto, Certified Public Accountants andAuditing Oversight Board
Hideki Fujii, Kyoto University
Shuji Mizoguchi, Yokohama National University
Masahiro Yurino, Doshisha University2

Japanese ACCOUNTING FORUM 2012

International Committee and2012 Editorial Board
Managing Editor:
Yoshihiro Tokuga, Kyoto University
Deputy Managing Editor:
Nobuhiko Sato, Meiji University
Editors:
Koji Kojima, Kwansei Gakuin University
Noriyuki Konishi, Aoyama Gakuin University
Norio Sawabe, Kyoto University
Akihiro Noguchi, Nagoya 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
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 – 2011
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

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JAPAN ACCOUNTING ASSOCIATION

Japanese
ACCOUNTING FORUM
No. 20, 2012
CONTENTS
Preface
Report2011 Annual Conference

Yoshihiro Tokuga(1)

Koji Ishiuchi(9)

Plenary Sessions
Plenary Session 1: From Accounting Standards to Financial ReportingStandards
The Intent and Functions of Accounting Standards
Yuji Yoneyama(11)

Some Challenges Surrounding Accounting Institutions in Japan
Yoshihiro Tokuga(12)Prospects for the Financial Reporting Standards in Japan
Masaki Yoneyama(13)

Plenary Session 2: From Cost Accounting Standards to Cost-Revenue
Accounting Standards
Cost Accounting Standards -Meaning and RoleKenji Okano(14)

Issues of Cost Accounting Standards
Fumiyasu Takahashi (15)6The Prospect of Cost and Revenue Accounting Standards
Shoichi Tsumuraya(16)

Plenary Session 3: From Auditing Standards to Assurance Service Standards
Significance and Role of Japanese Auditing Standards
Tatsumine Ito(17)

Takashi Kojima(18)

Challenges Inherent in Auditing Standards

The Current State of Financial Statement Audits and Prospects for Standards on
Assurance Engagements
Takatoshi Hayashi (19)Special Committees
Objective and Limitations of Fair Value Measurements
Keiko Kitamura (20)International Convergence of Accounting Standards and Underlying Conceptsof Financial Reporting
Hideki Fujii (21)Subject Research Committee
Fair Value Accounting in Historical Perspective-An Inquiry into the Original Functions of AccountingIzumi Watanabe (22)Study Groups
A Study on IFRS Education
Kenji Shiba (24)7Management Accounting Change through Information Needs Expansion
Hiroyuki Nakamura (26)International SymposiumJapan

Kazuo Hiramatsu (28)

Korea

Jongsoo Han

TaiwanFujing Shiue(31)

Regional Reports
Hokkaido Region

Koichiro Matsumoto(34)

Tohoku Region

Teruo Kaneko(35)

Kanto Region

Yuji Hayashi(35)

Chubu Region

Akihiro Noguchi (36)

Kansai Region

Norio Takasu (37)

Kyushu Region

Keiichi Oishi (38)82011 Annual Conference of JAA
Report2011 Annual Conference
Chairman of 2011
Annual Conference

Koji Ishiuchi
Kurume University
Program
The 70th Annual Conference (2011) of Japan Accounting Association (JAA)
hosted by Kurume University was held from September the 17th to 19th. The main
theme of this year’s conference was “Change and Future of Accounting Standards.”
On the first day (September the 17th), we had presentations by two Special
Committees, one Subject Research Committee and two Study Groups after theCouncil and General Assembly of Membership. Then a welcome reception was heldat Suikoen Hotel in Kurume city.
On the second day (September the 18th), we had 58 presentations about various
topics in concurrent sessions and three plenary sessions based on the financial
accounting, the management accounting and the auditing respectively. We also hadsome presentations by Korean and Taiwanese researchers in an international session.
Furthermore, memorial lectures by three leaders from each accounting area were
held. They were open to public. The lecturers were Professor Kazuo Hiramatsu whois the president of JAA, Professor Michiharu Sakurai who is the past president ofJapan Cost Accounting Association and Professor Yoshimasa Tomosugi who is thepresident of Japan Auditing Association.
On the third day (September the 19th), there were heated discussions in the threeplenary sessions after 46 presentations in the concurrent sessions. We also had an
International Symposium about IFRS adoption in Korea, Taiwan and Japan. The
debaters were Professor Jongsoo Han from Korean Accounting Association (KAA),
Professor Fujiing Shiue from Taiwan Accounting Association (TAA) and Professor
Kazuo Hiramatsu from JAA.
Over 800 members attended this year’s 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.

9The schedules for 2011 Annual Conference was as follows：
Date and Time
Sept. 16 13:00－15:00
15:00－17:30
Sept.17 10:00－12:00
13:00－14:30
14:35－15:50
15:55－16:30
16:45－18:00
Sept.18
9:50－12:00
9:50－12:00
13:00－15:10

Sept.19

15:30－17:55
9:50－12:00
10:00－12:00
13:00－15:00

EventsScreening Committee for Awards
Meeting of Board of Directors
Meeting of Council
General Assembly of Membership
Special Committee Reports
Subject Research Committee Report
Study Group Reports
Concurrent Sessions
International Session
Plenary Sessions
1．From Accounting Standards to Financial ReportingStandards
2．From Cost Accounting Standards to Cost-Revenue
Accounting Standards
3 ． From Auditing Standards to Assurance Service
Standards
Memorial Lectures
Concurrent Sessions
International Symposium
Plenary Panel Discussions

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2011 Annual Conference of JAA

Plenary Session 1:
From Accounting Standards to Financial ReportingStandards
The Intent and Functions of Accounting Standards
Yuji Yoneyama
Hokkaido University“Accounting principles for business enterprise” as accounting standards in Japanwas based on the same disclosure philosophy as the United States. It specified thecontents of the financial reporting in the disclosure and audit system of the
Securities Exchange Act. It was important to reflect its thinking on laws of financial
accounting, and to reform the education of accounting at postwar time for “recoveryof Japanese industry" and "modernization of the corporate accounting system.”“Accounting principles for business enterprise” was set up by public sector
initiative. Since CPAs did not exist yet, accounting standards setting by private
sector like U.S. was not adopted. It was thought that it was necessary to specify theauthority of accounting standards by law directly.
It was one of the important duties of “accounting principles for businessenterprise” to reflect its thinking on the accounting regulations of the commercial
law or tax law. However, since the commercial law was a statute, “accounting
principles for business enterprise” also had to be changed. This situation became afactor which restrains the financial reporting in Japan.
By offering basic concepts, “accounting principles for business enterprise” hasattained the spread of modernistic accounting practices, and the reform of theeducation of accounting, while passing through the change process in both sides.
The basic purpose of the financial reporting in the disclosure system of the
Securities Exchange Act is the same as before. However, the contents of information
changed a lot. So, the duty of adjustment between domestic laws of financial
accounting has ended substantially.

11

Some Challenges Surrounding Accounting Institutions in Japan
Yoshihiro Tokuga
Kyoto University
The main agenda I have is to highlight the current issues relating to accounting
norms in Japan and to offer possible solutions to them. There are several
inconsistent accounting norms in Japan that have a similar level of legitimacy
towards the same accounting transactions and/or events within the same company.
In other words, companies are sometimes torn between which norm they should
conform to.
The purpose of my presentation is to offer the solution to eliminate or to prioritize
this complicated and overlapped situation of accounting norms. This conflicting
situation was mainly caused by two issues ①that Business Accounting Principle has
a functionally multifaceted nature, and ②that all companies regardless of whether
they are publicly held and closed must follow it, though its application is limited tothe individual financial statements.
Roughly speaking, there are two solutions: one is to repeal BAP, the other is toamend BAP and/or other accounting norms and delete the duplicated functions andcoverage. If we adopt the former solution, we will newly have to establish new
accounting principles and conceptual framework because a vacuum in accounting
norms for the closed SMEs will arise. Therefore, I would like to offer the following
solutions: ① BAP will be amended and reset as accounting standards andconceptual framework for only the closed (unlisted) companies, and ②the coverageof the Financial Instruments and Exchange Act will be limited to the consolidated
F/Ss of the publicly held companies.

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Prospects for the Financial Reporting Standards in Japan
Masaki Yoneyama
Waseda University
The main point at issue in this presentation is under which condition thedisclosure of new non-financial information is supported in financial statements.
Three points are discussed in order to achieve the goal. That is: (a) what factors
affects the inclusion (or exclusion) of new non-financial information as one of theitems under regulation? (b) Is the actual regulation on disclosure consistent withwhat theory tells us? (c) Do we have enough information in order to forecast(following the theory described above) what non-financial information will be
included in our disclosure regulation?
The result is that (a) (1) how we interpret the purpose of Financial Instruments
and Exchange Act, (2) how we split the role of forecasting future cash flow between
managers and investors, (3) how companies lack enough ability to disclose
necessary information to investors and (4) how we assume the behavior of investors
under the condition that we have no regulation on disclosure, those four factors
decide the treatment of a certain non-financial information in the disclosure
regulation, and (b) the actual regulation in Japan is basically consistent with what
the theory above tells us. But (c) as we lack important information, it is still hard for
us to forecast what non-financial information will be included in our disclosure
regulation.

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2011 Annual Conference of JAA
Plenary Session 2:
From Cost Accounting
Accounting Standards

Standards

toCost-Revenue

Cost Accounting Standards -Meaning and RoleKenji Okano
Matsuyama University
1. Meaning of Cost Accounting Standards“The Cost Accounting Standards, Japan (CASJ)” of Japan was enacted by Kigyou
Kaikei Shingikai at 1962. This “CASJ” is promulgated from Generally Accepted
Cost Accounting Practices in Japan．And “CASJ” forms a link in the chain of“Kigyou Accounting Principles of Japan.” At first, we shall discuss a history of Cost
Accounting Standards in Japan to recognize an origin and a meaning of Cost
Accounting Standards.
A lesson learned from research on history is that there were two views on “Cost
Accounting Standards.” One view is that “Cost Accounting Standards” is the sameas “Cost Standards.” This view is a view of American Accounting Association.
Another view is that “The Cost Accounting Standards, Japan (CASJ)” means “Cost
Accounting Standards.” This is a view of Japanese Professors in charge of Kigyou
Kaikei Shingikai. According to those researches, we can understand generally Cost
Accounting Standards as follow.
“Cost Accounting Standards” is a statement in recognizing, accumulating andreporting objectives established by one authoritative organization.
2. Role of Cost Accounting Standards
As to Role of Cost Accounting Standards, “CASJ” states that “This Standards
explain a fundamental framework of effective cost accounting practices that are
promulgated and implemented by corporations.” Also, “This Standards is a link in
the chain of Kigyou Accounting Principles and especially prescribes about costs.”
Another Role of “CASJ” is supporting modernization, enlightenment and diffusionof Cost Accounting Practices in many corporations.
3．A point of View on modern cost accounting theory and practices, we need to study
new “Cost Accounting Standards” or “Cost and Revenue Accounting Standards.”
Moreover, we expect a research on “Cost and Revenue Accounting Standards” ofseparate industries.
14Issues of Cost Accounting Standards
Fumiyasu Takahashi
Nihon University

The present day “Cost Accounting Standards” (CAS) was enacted back in 1962and has been applied since then without any revisions. CAS as a practice model has
lost their efficiency to a remarkable degree and should be revised as soon as possible.
But we cannot see any chance of their revisions. One reason for this is that we do
not have sufficient empirical research on the gaps between CAS and cost accounting
practices, nor have possible solutions to the problem been studied. This paper
discusses the issues of cost accounting standards based on the results of empiricalstudies.
I conducted surveys in which I set up two models necessary for the constructionof the fundamental framework of cost accounting standards. ModelⅠexamines thegaps by explicating systematically the structure of cost accounting in Japan. Thismodel highlights the reality of CAS by examining how the proposition “Different
Costs for Different Purposes” a basic principle of cost accounting has been practiced
in Japanese companies. ModelⅡdescribes the function of cost accounting standards,
and highlights how cost accounting standards, for the purposes of both financial
accounting and management accounting, should be revised and systematized.
The surveys showed that cost accounting practices in Japan were still lagging
under the influence of the present CAS, and enormous gaps had arisen between thetwo models. In other words, as for Model I, there were many companies which use
the idea of “the same cost by the same method at the single cost system for different
purposes.” As for Model Ⅱ, there were still strong opinions to revise the present
CAS. It must be said that work to fill these gaps is the most urgent issue so that
“Relevant Lost” of CAS is to be recovered.

15

The Prospect of Cost and Revenue Accounting Standards
Shoichi Tsumuraya
Hitotsubashi University
This presentation focuses on the prospect of Cost and Revenue AccountingStandards, especially on disclosure of internal information (costing information) bypublic companies.
For most Japanese public companies, they already disclose their own internal
information through IR (Investor Relations) tools. For example, we can see segment
financial statements (B/S, P/L, C/F), monthly earnings forecasts and costing
information (price and physical variance) in companies annual reports. I gathered
relevant data form a survey by the Japan Investor Relations Association (JIRA). The
results show that more than 70% of the companies disclose more disaggregatedsegment information than mandatory segment information disclosure.
Another point of presentation is earnings forecast information. The JIRA survey
show that many companies make their earnings forecast based on their in-company
budget. It means that most Japanese companies disclose their budget figuresindirectly through disclosures of earnings forecast information. Prior research has
found a relation between earnings forecast information and stock-price. In-company
budget information has a possibility of having affected the capital market(stock-price), through earnings forecast information.
Main concern related to disclosure of internal information is the proprietary costproblem. But I couldn’t find a significant evidence of the proprietary cost. Further
discussion and research on internal information reporting lead to the prospect of
Cost and Revenue Accounting Standards.

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2011 Annual Conference of JAA
Plenary Session 3:
From Auditing Standards to Assurance Service Standards
Significance and Role of Japanese Auditing Standards
Tatsumine Ito
Seinan Gakuin University
The financial statements audit by professional auditors features to comply with
Generally Accepted Auditing Standards (GAAS) and its framework is set forth in
GAAS. Japanese Auditing Standards are set and made public by the BusinessAccounting Council.
The framework of the financial statements audit doesn’t fix on. Because theframework varies with changes in social and economic view, the contents of GAAP
always constant cannot be. Current Japanese Auditing Standards are what trace tochange, we are in will be needless to say the significance of Japanese AuditingStandards transformation is occurring for also verified whether you will catch thedevelopment process of the framework of the financial statements audit.
We also discuss the “sublimation” of Japanese Auditing Standards. It is afrequently-used term in the recent revisions of Japanese Auditing Standards. I deal
with the following questions: (1) what is the definition of the “sublimation” ofJapanese Auditing Standards?, and (2) how Japanese Auditing Standards are affectedby the notion of the “sublimation” of Japanese Auditing Standards.

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Challenges Inherent in Auditing Standards
Takashi Kojima
Chuo University
I discussed the problems of International Standards on Auditing (ISAs) before
revision under the Clarity project and the Clarified ISAs, the Auditing Standards(ASs) codified by the Business Accounting Council and Auditing Standards
Committee Statements (ASCSs) issued by the Japanese Institute of Certified Public
Accountants (JICPA).
We should evaluate the effectiveness of the Clarified ISAs concerning auditing
accounting estimates, related parties, using the work of an auditor’s expert andgroup audit which have been effective on or after December 15, 2009.
Japanese auditors must comply with the AS under the Financial Instruments andExchange Act. We should reconsider the AS revised on March 26, 2010 because it
has operational issues, including the definitions of audit risk and its components.
The JICPA should propose modifying the problems of the AS in light oftranslating ISAs. ISAs should be translated more accurately into Japanese when the
JICPA draw up ASCSs. ASCS No. 41, “Group Audit” based on the Clarified ISA600
should be applied to auditing practices in an effective manner on or after April 1,
2012.

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The Current State of Financial Statement Audits and Prospects forStandards on Assurance Engagements
Takatoshi Hayashi
Kwansei Gakuin University
In recent years the revision of the auditor’s reporting model is discussed actively
and continuously in the international accounting community. There are two
background factors that affect financial statement audits. One factor is the change inquality and quantity of financial statement information, such as increasing
uncertainty and subjectivity involved in accounting estimates, increasing demand for
management judgments under principle-based accounting, or extension of note
disclosure. The other factor is the need to reduce the expectation gap. Financial
statement users have expressed concern that the standard audit report provides little
information to evaluate the quality of the audit itself.
The concept release of the Public Company Accounting Oversight Board issued inJune 2011, for example, presented four alternatives for changes to the auditor’sreport, which are: developing Auditor’s Discussion and Analysis in order tocomplement the auditor’s report, required and expanded use of emphasis paragraphs,
auditor assurance on other information outside the financial statements, andclarification of language in the standard auditor’s report. The revision of theauditor’s reporting model has two aspects, that is, improvement of communication
between users of financial statements and auditors as to nature and level ofassurance and extension of the role of auditor.
The argument about these issues suggests the need for setting standards on
assurance engagements according to content and level of assurance provided.

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2011 Annual Conference of JAA
Special Committee

Objective and Limitations of Fair Value Measurements
Chair: Keiko Kitamura
Chuo University
What is fair value? Is that one of the measurement attributes like historical cost,
net realizable value, replacement cost and discounted present value or is that aoverall concept in which fair value means different value from other measurement
attributes? The basic standpoint of this report does not regard fair value asmeasurement attributes. Hence, fair value could be regarded as the alternative tohistorical cost or replacement cost. On the other hand, as required in recent Asset
Liability View on income, NRV or DCF could be used as fair value.
Measurement in accounting differs from Measurement in physics or Math in thatthe former is made based on a certain presume or assumption in society. Of course,
fair value measurement is also same. There is a certain presume on measuring fairvalue and fair value is also a price determined based on that presume. Therefore, wehave to find out information usefulness come from fair value measurement by not
only theoretical study but also empirical research.
This report includes 4 parts.
Part1: A comprehensive discussion of fair value measurements,
Part2: Fair value extension in nations and bodies
Part3: Fair value extension in individual standards
Part4: An empirical research on fair value measurements
The aim of this report is to discuss what fair value means and address thelimitation of it.
Fair value is not the measurement attribute, but agreeable measurement amounts
for both seller and buyer in certain presume. Therefore, fair value is more curious
than measurement attributes.
.

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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 future
development of the international convergence of accounting standards, with specialreference to underlying concepts introduced and/or redefined in the improved
conceptual framework of the IASB and FASB published in 2010. Our interim report
wraps up the first year results of our research project from 2011 to 2012, and consistsof 10 chapters. Their general outlines are as follows.
After showing our research interests in the 1st chapter, we discuss continuity anddiscontinuity in basic thoughts of financial accounting in Japan, through a
comparative study of the Japanese Financial Accounting Standards for BusinessEnterprises as amended in 1982 and the Japanese Conceptual Framework for
Financial Reporting 2006 in the 2nd chapter, and a theoretical analysis of theimplications of transit from revenue and expense view to asset and liability view for
double-entry accounting system in the 3rd chapter.
In the 4th through 9th chapters, we reconsider on the main topics coped with in the
joint projects that have been conducted by the IASB and FASB since Norwalk
Agreement 2002; e.g., the objectives of financial reporting, the qualitative
characteristics of decision-useful accounting information, definition and recognitionof elements of financial statements, measurement, reporting entity, and incomepresentation in financial statements.
We tentatively conclude, in the last chapter, that we can observe a relatively clear
change in philosophical aspects of disclosure; i.e., increasing influences of thedecision-usefulness approach in the objectives of financial reporting, and dominatingrole of the asset and liability view of accounting in qualitative characteristics offinancial information. But, it is not yet obvious that these changes would bring about
expected development of a substantial function of accounting; i.e., recognition,measurement, and especially income determination.

21

2011 Annual Conference of JAA
Subject Research Committee

Fair Value Accounting in Historical Perspective-An Inquiry into the Original Functions of AccountingChair: Izumi Watanabe
Osaka University of Economics
Double-entry bookkeeping, the backbone of income calculation in accounting,has since its inception at the start of the 13th century measured income on the basisof contemporary transaction prices, i.e., at historical cost. The biggest strength of thehistorical cost measure is that the measured value, as a historical given, offers
enduring objectivity. In other words, it enables an audit examination of the factual
transaction. In this capacity lies the point of inception of adopting double-entry
bookkeeping and the main reason for the deep reliance on accounting. Thisreliability, anchored in factuality and verifiability, explains why accounting anddouble-entry bookkeeping have been passed on through the generations for eight
hundred years.
Obviously, historical cost designates the value at the time of the transaction, i.e.
the transaction price (which is normally the market value). At the time of settlement,
this transaction price becomes historical cost, indicating historical value. Therefore,
as transaction prices, current value and historical cost differ only as a matter ofrepresentation arising from the difference at different points on the time axis.
Market value, generally referred to as current value, is of an altogether different
nature from the concept of fair value that emerged in the 1950s. Fair value may be
defined as the discounted present value understood as of future cash inflows thatemerged in the 1950s, even though it too was is sometimes referred to as current
value. Methods for revising transactions’ contemporaneous prices based on current
value appeared as early as during the emergence of double-entry bookkeeping.
Marking-to-market of loan assets, that is, the accounting recognition of loan losses,
and the recognition of write-downs on supplies appear already in the 14th century in
the account books of Italian merchants. Historical cost and marking-to-market
accounting measures have co-existed since the beginning of double-entry
bookkeeping.
At the time of a transaction, everything is transacted at market value (present
contemporary value), at prices that become historical cost at the time of settlement
just by operation of time. In other words, market value accounting is understood22

within the framework of a wider-sense historical cost accounting (including
historical and present value accounting), that is, in the framework of transaction
price accounting, while being dissimilar in nature from the discounted present value
accounting which as “future accounting” belongs to the same realm of the same asfair value accounting.

Historical cost

Historical value(Historical cost accounting）

Transaction price accounting（Realized income accounting）

Measurement by transaction priceMarket value

Present value(Market value accounting)
Measurement by market value

Fair value accounting
Discounted present value

Future value (Unrealized income accounting）（Discounted present value accounting）

The topic of our research group concerns examining fair value accounting issues
through the filter of history. Irrespective of the discussion that emerged this summer
about a narrowing of the scope and postponement of the implementation of IFRS
application, the objective of our Subject Research Committee is to clarify
conceivable measuring methods of accounting through an inquiry into the originalrole of accounting functions. Amid global trends dominated by financial capital withthe emphasis on an approach of decision-making relevancy, in order to revive
Japan’s economy with its understood accepted focus on manufacturing, once more
the significance of net profit information as opposed to comprehensive income
information will be examined not only from the perspective of reliability but
clarified also from the viewpoint of utility.

23

2011 Annual Conference of JAA
Study GroupA Study on IFRS Education
Chair: Kenji Shiba
Kansai University
Keywords:
IFRS, Financial Reporting, IFRS Education, Accounting Profession
The research theme of this study group is IFRS education. Until now, a large
number of books dealing with IFRS have mainly described the differences between
Japanese standards and IFRS. Their contribution is valuable as regards accounting
practice since practitioners directly face these new issues. Nevertheless, they do notaddress the question of the place that should be given to IFRS in higher education(undergraduate and graduate programs).
In this research, we collected information about (1) the current state of IFRS
education, (2) the importance of historical considerations regarding IFRS education
and related issues, (3) the basic concepts necessary to IFRS education. Based on ourfindings, we will express our views about IFRS education in the second year of thisresearch.
In the first part, about the current state of IFRS education, we investigated theeffects of IFRS introduction on accounting education. In a first chapter, entitled“The Sense and Role of IFRS and Their Influence in Japan,” we first defined a set ofissues. In the following chapters, we collected information as comparable aspossible about 1) the current state of IFRS introduction, 2) IFRS in higher education
institutions, 3) the accounting profession (especially CPA and equivalents) in thefollowing countries: the U.S., the U.K., France, Germany, China, Korea and Japan.
In the Japanese case, we were able to proceed to a deeper investigation thanks to theabundance of available information.
In the second part, entitled “Importance of Historical Considerations Regarding
IFRS Education,” we put IFRS in the context of the historical changes of financial
reporting. We analyzed mainly the literature about the objectives of financial
reporting in the U.S., and we compared these views with the examples of France andGermany. Financial reporting in the U.K. and Asian countries was not included inthis comparison, but for the time being, we decided to study the experience of the
U.S., France and Germany.
24

In the third part, entitled “IFRS Basic Concepts,” we analyzed the basic concepts
necessary to IFRS education in a theoretical viewpoint. After posing the necessity of
adopting a specific approach when teaching IFRS, we analyzed a first approachbased on different views of the concept of profit, and a second approach based on
accounting models. Last, we defined and classified the basic concepts common tothese two approaches.
Chair:
Kenji Shiba（Kansai University）
Members:
Nobuhiko Sato（Meji University）
Sadako Inoue （University of Marketing and Distribution Sciences）
Junko Saino（Konan University）
Tomomi Shiosaki（Hiroshima City University）
Noriyuki Tsunogaya（Kyushu University）
Satoshi Tomita（Kansai University）
Akiko Fujita（Meiji Gakuin University）
Aki Yamauchi（Senshu University）
Yasuhiro Yamada（Shiga University）
Research Collaborators:
Takeo Itabashi (Meiji University)
Motoko Shoji（KPMG AZSA LLC）
Tokuei Sugimoto（Kwansei Gakuin University）
Meiling Sun (University of Marketing and Distribution Sciences）

25

Study GroupManagement Accounting Change throughInformation Needs Expansion
Chair: Hiroyuki Nakamura
Yokohama National University
Management accounting is continuously changing by many factors. We
especially focus on information needs. Historically, an accounting system has been
regarded as an information system. So, we think that the management accounting
system has been changing due to changes in information needs.
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 management accounting practices in Japanese companies to identify
management accounting changes through information needs expansion. Third, weshow the essence of management accounting for the future.
In the first year, we showed an analytical model for management accountingchange as a result of our research project. In this model, we defined informationneeds as the explanatory variables and management accounting change as thedependent variable. But all changes cannot be explained these two variables. So, we
introduce a moderator into this model. Moderator can become not only accelerator
but also constraint.
Based on this analytical model, each member of our study group showed research
results of related readings. In our interim report, we deal with contribution margin in
Chapter 1 and 2, responsibility accounting in Chapter 3, environmental accounting
in Chapter 4, supply chain management accounting in Chapter 5, management
accounting information system in Chapter 6, capital budgeting in Chapter 7, target
costing in Chapter 8, brand management accounting in Chapter 9, Activity-Basedcosting of service industries in Chapter 10.
For the final report, we will implement an extensive questionnaire survey andinterviews of Japanese company. This will promote our group to clarify the essenceof management accounting change.

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
26

Kimura (Kansai University), Nobuyuki Mochiduki (Prefectural University of
Kumamoto), Yukihiko Okada (Tsukuba University)27

2011 Annual Conference of JAA
International Symposium: Japan

Update of IFRS Adoption in Japan: September 2011
Kazuo Hiramatsu
President of Japan Accounting Association
Kwansei Gakuin University, Japan
In recent years, Japan showed changes in its attitudes towards IFRS. First, Japanchanged the attitude to move forward to the convergence with IFRS in 2006. This
was the impact of EU’s evaluation of equivalence of Japanese-GAAP (J-GAAP)with IFRS. Then in 2009, Japan moved forward to the adoption of IFRS, while
making efforts for convergence at the same time. This was the impact of the US andof the global movements towards the adoption of IFRS. In 2011, Japan changed its
attitude again. This time, Japan decided to postpone the adoption of IFRS. A
Nation-wide damage caused by the earthquake of March 11, 2011, was one of thereasons to postpone, but another reason was the impact from the change of the US
attitude.
On November 14, 2008, US-SEC published the “Roadmap for Adoption of IFRS
by US Issuers,” the content of which was made public in advance in August 2008.
Responding to this roadmap, Nippon Keidanren (Japan Business Federation) issued
a report on October 14, 2008, on the “Future Directions of Accounting Standards inJapan: The Next Step towards a Single Set of Accounting Standards.” Taking into
account this report, the Business Accounting Council of Financial Services Agency
published the “Opinion on the Application of International Financial ReportingStandards (IFRS) in Japan (Interim Report)” on June 30, 2009. The “Interim Report”
suggested that the mandatory use of IFRS may be decided around 2012. In such acase, IFRS would be applied to the consolidated financial statements of listedcompanies starting from 2015 or 2016. It also proposed that IFRS can be applied
voluntarily from the fiscal year ending in March 2010 by listed companies whose
financial or operational activities are conducted internationally.
A questionnaire survey was performed on November 15, 2011, by Tokyo Stock
Exchange on the attitudes of companies on the application of IFRS. Out of the 2,283
survey companies, 1,572 companies (68.9%) responded to the questionnaire. The
result showed that 1,059 (67.4%) began preparation to apply IFRS, 320 (20.4%) did
28not make any preparation, and 97 (6.2%) were under preparation for voluntary
application. However, the number of the companies which have applied IFRS thus
far is still small. For fiscal period ending in March 2010, only one company, Nihon
Dempa Kogyo, actually applied IFRS. On March 2011, Sumitomo Corporation and
HOYA applied IFRS.
As mentioned above, IFRS was expected to be applied to consolidated financial
statements of listed companies. In order to discuss about the accounting standards
for non-consolidated financial statements, the Advisory Panel was established on
September 28, 2010. The final report of the Advisory Panel was published on April
28, 2011. It referred to accounting standards for development costs, goodwill,
post-employment benefits, and comprehensive income as the areas which needspecial consideration for non-consolidated financial statements. The Council on
Accounting of Unlisted Companies was also established on February 25, 2010. Its
report was published on August 30, 2010. It suggested the necessity to set a
simplified version of Accounting Guidelines for SMEs. The new SME guidelines
will be published soon.
While the preparation to apply IFRS showed much progress in Japan, a suddenchange took place in 2011. This time again, it seemed that Japan was influenced by
the US. On May 26, 2011, US-SEC issued a Staff Paper “Work Plan for theConsideration of Incorporating International Financial Reporting Standards into the
Financial Reporting System for U.S. Issuers.” It suggested a possibility that the US
may take the “Condorsement” Approach as one of the methods of incorporating
IFRS into the US. This staff paper had a strong influence on Japan. On June 29,
2011, Nippon Keidanren issued a report with the title of “Request for Early
Discussion on the Application of IFRS Adoption,” in which it requested to change
the previous decision of the “Interim Report” and to postpone the application of
IFRS in Japan. Many companies welcomed this proposal to postpone the IFRS
adoption, while some people expressed a strong concern about it.
Because Japan now postponed the application of IFRS, there exist six accounting
standards in Japan. ①IFRS, ②J-GAAP, which is being converged with IFRS, ③
J-GAAP, which was discussed by the Panel, ④Accounting Guidelines for SMEs,⑤Simplified Accounting Guidelines for SMEs, which was suggested by Council on
Accounting of Unlisted Companies, ⑥IFRS for SMEs (in case SMEs want to useit). This situation is not normal, and should be resolved as soon as possible.
From the past experiences, general trends can be observed regarding IFRS in
Japan. If there are pressures or influences from US/EU, Nippon Keidanren makes
29some requests on IFRS. Then Business Accounting Council responds to such
requests. If this scheme is correct, a question arises: can we find the identity ofJapan? The answer is “No.” So, Japan should establish a national accounting
strategy, including the adoption of IFRS. Otherwise, the “accounting power” ofJapan will decline, and Japan will further lose the international reputation andrespect.

30

International Symposium: Korea

IFRS and Accounting Strategy of Korea
Jongsoo Han
Vice president of Korean Accounting Association
Ewha Womans University, Korea
The year of 2011 is a milestone of accounting for the Republic of Korea: Korea’s
adoption of IFRS required all listed Korean companies to switch their accounting
rules from K-GAAP to K-IFRS starting from January 1st, 2011. The transition fromK-GAAP to IFRS was quite successful. However, it was not easy to achieve such a
successful transition. It took significant amount of time and effort, as well as
carefully designed and well-implemented strategies. This is because changes due tothe adoption of IFRS are not limited only to accounting industry. Adoption of IFRS
also demands changes in legal and social circumstances. Korea’s strategies for the
successful transition to IFRS could be summarized as follows:
Early announcement of IFRS adoption roadmap: Korea announced its IFRS
adoption roadmap and completed the Korean version of IFRS (K-IFRS) in 2007, 4
years before the actual adoption year, to provide enough time for interested parties toprepare themselves for the change.
Two-tier accounting system: IFRS is required only for the listed companies.
Non-listed companies were given a choice between IFRS and the simplified
accounting standards to lighten their burden of using heavy accounting standard
such as IFRS.
Big-Bang (not convergence) and Full Adoption (not partial adoption) approach:
Korea’s past experience on phased convergence or partial adoption of IFRS was not
successful. Even if Korea had issued 28 statements since 1999 by adopting asubstantial portion of IFRS and made K-GAAP be almost equivalent to IFRS,K-GAAP was discounted as non-compliant with IFRS. Thus, Korea took the
big-bang approach, in which Korea replaces its accounting standards from theformer K-GAAP to IFRS as of January 1st, 2011.
Implementation strategies guided by IFRS Implementation Task Force: The IFRS
Implementation Task Force was formed in 2007, consisting of regulatory bodies,academia, accounting firms and business associations. The task force guided theimplementation process of IFRS adoption. It monitored the overall implementation
progress, reviewed amendments to laws and regulations, and addressed issues raised
by interest groups.
The transition from the old K-GAAP to IFRS was quite successful in a sense that31

we were able to minimize potential negative impacts of IFRS adoption. However, inorder to maximize the positive effects of IFRS adoption, we should continue
reforming the Korean accounting system in every possible way. The Accounting
Advancement Forum, made up of academia, accounting firms and regulatory bodies,
has formed in 2010 as a result. It has discussed the vision and advancement of
Accounting in Korea. The forum published a research report entitled, “The Vision
and Strategy of Accounting Advancement for 2020.” The report divides accounting
into four sub-areas and provides what we should seek for the next 10 years in eachof the four sub-areas, which are summarized below:
Strategies for accounting education: In the past, accounting experts needed only
technical skills and professional knowledge. However, under the IFRS era,accounting experts need not only technical skills and professional knowledge, butalso non-technical skills such as communication and judgment ability, andprofessional values such as business ethics. In order to provide these non-technicalskills and values, we should build a “Professional master program in accounting,”
and provide various types of certifications for professional accountants; e.g.,
Certified Accountants in Business (CAB) as entry level accountants, Certified Public
Accountant (CPA) as professional accountants, Certified Public Auditor (CPAuditor) as independent auditors and Certified Business Valuator (CBV) as
independent valuators and appraisers.
Strategies for Accounting Industry: The accounting industry currently receives aninsufficient amount of recognition, despite its importance. Sometimes, accounting iseven blamed for its low credibility. Thus, an accounting industry currently takes
only 0.2% of Korean GDP. Under the IFRS era, we should strengthen the credibilityof the accounting industry by implementing the Accounting/Auditing Accreditation
program and improving each accounting firms’ specialty. We should also expand theaccounting market by entering into new markets such as governmental accounting,non-profit accounting, and off-shore markets.
Strategies for Accounting Standards: As we have implemented IFRS, we foundthat IFRS in many cases does not reflect the unique local business environment, andthat it is not easy to have IFRS reflect the local business environment. Therefore,
under the IFRS era, we should conduct more research on accounting standards andproactively participate in the international accounting activities. In addition, active
cooperation among countries in the same region is inevitable to represent the voiceof local market’s accounting sector.
Strategies for Accounting Regulations: Currently, multiple bodies are regulating
the accounting industry, and several of those regulatory bodies do not posses enoughknowledge or skills. Hence, the results are the application of inconsistent andsometimes improper regulations. Under IFRS, we propose to establish an“Accounting Steering Committee,” which will oversee the accounting regulators and32accounting firms. The Accounting Steering Committee will play a role very similar
to PCAOB in the USA, in that it will maintain the overall quality of accounting in
Korea.
Korea has realized that the adoption of IFRS takes much more than just adopting
a set of accounting standards. However, we believe that adoption of IFRS is an
opportunity for us to grow to the next level. If we keep carrying out our remaining
tasks of the IFRS roadmap and continue to move toward the high-quality
IFRS-based financial reporting, we should be able to achieve more transparent andmore trustworthy accounting system.

33

2011 Annual Conference of JAA
Regional Reports

Hokkaido Region

Koichiro Matsumoto
Hokusei Gakuen University

The regional meetings were held in 2011 as follows.
1. The 79th Regional Meeting at Asahikawa University on 11 June, 2011.
(1) “Computer Accounting Educations: In Adopting the Faculty-test,” Hidenori
Takagi, Hokkaido College, Senshu University(2) “The Reaction of the Tax Reform about Domestic Flowing Back ofOverseas Subsidiary Profits, and a Market,” Yuzuru Sakurada, Hokkaido
University and Yoshiyuki Nakanishi, Hokkaido University (Doctoral
Candidate)
2. The 80th Regional Meeting at Sapporo Garden Palace on 11 October, 2011.
(1) “Representatives of Stretch Budgeting for Control,” Masatoshi Uchida,
Hokkai-Gakuen University(2) “Rethinking of Accounting Standards for Individual Entity Coping with
Adoption of IFRS: Premising to Maintain “The Policy of Authorized
Settlement Accounts,” Toshi Hatayama, Professor Emeritus, Sapporo
Gakuin University(3) “The 40th Anniversary of Hokkaido Chapter of Japan Accounting
Association,” Mitsuro Kuno, Professor Emeritus, Otaru University ofCommerce34

Tohoku Region
Teruo Kaneko
Aomori Public College
In 2011, following meeting were held.
1. The 80th Meeting, June 11, 2011 at Iwate Prefectural University(1) “Modern Characteristics of Intangible Assets Accounting in Germany,”
Masahiro Shiseki, Aomori Public College(2) “The Problems on Revenue Recognition under Corporate Income Tax:
Focus on the Allowance for Sales Returns,” Tomohiro Kaneko, Iwate
Prefectural University
2. The 81th Meeting, November 26, 2011 at Tohoku Institute of Technology(1) “The Crisis Management to Damage of Corporate Value,” Tadashi Ishizaki,
Chuo University(2) “The Performed Role of Approved Accounts Basis,” Teruo Kaneko, Aomori
Public College

Kanto Region
Yuji Hayashi
Takachiho University
The 59th regional meeting was held at Takachiho University on November 26,2011.
The main theme of the meeting was “The Conceptual Framework: Fundamental
Issues and Reviews.” Discussions were coordinated by Nobuhiko Sato, Meiji
University.
The following reports and panel discussions were presented.
(1) “Conceptual Framework in Germany - Its Roles and Characteristics,” Koji
Kurata, Rikkyo University(2) “Conceptual Framework in France - Its Roles and Characteristics,” Akiko
Fujita, Meiji Gakuin University(3) “Conceptual Framework in Japan - Its Roles and Characteristics,”
Katsunobu Mandai, Hitotsubashi University35

(4) “Conceptual Framework of the IASB - Its Roles and Characteristics,”
Tatsumi Yamada, KPMG AZSA LLC

Chubu Region
Akihiro Noguchi
Nagoya University
The regional meetings were held as follows;
1. The 126th Regional Meeting at Aichi Toho University on April 16, 2011.
(1) “Thoughts on International Convergence of Accounting Standards inSoutheast

Asian

Emerging

Economies

from

New

Institutional

Perspective,” Masataka Hiraga, Aichi Gakuin University(2) “Performance Evaluation in An Industrial Policy of Local Government,”
Haruo Yamakita, Chubu University(3) “Accounting for Sukuk,” Hajah Mustafa Mohd Hanefah, Islamic Science
University of Malaysia, and Akihiro Noguchi, Nagoya University
2. The 127th Regional Meeting at Aichi Gakuin University on July 9, 2011.
(1) “Sganzini's two Views of the Balance Sheet,” Tsukasa Nishidate, Aichi
Gakuin University
Discussant: Tatsuhiko Tashiro, Meijo University(2) “Accounting Conservatism and Distribution of Wealth,” Kazuhiro Manabe,
Fukui University of Technology University
Discussant: Manabu Nishiumi, Aichi Gakuin University(3) “GASB:Governmental Accounting Standards Board SEA: Service Efforts
and Accomplishments,” Risa Yoshimoto, Aichi University
Discussant: Michimasa Satoh, Nagoya University
3. The 128th Regional Meeting at University on December 3, 2011.
Research Paper Presentation“The Change of Ownership Structure and R & D Investment,” Tomohiro Noguchi,
Aichi Gakuin University
Discussant: Akihiro Noguchi, Nagoya University

36Plenary Session(Special Guest Speaker)“Yokkaichi Petrochemical Complex and Yokkaichi Port,” Tetsuo Inoue, Yokkaichi
University and Former Mayor of Yokkaichi City
(Guest CPA Speaker)“Challenges for Japanese Accounting and Auditing Practices in the Convergence
toward IFRSs,” Masahide Kinbara, Tokai Chapter of JICPA(Guest Academic Speaker)“Link between Balance Sheet and Cash Flow Statement: Views of FASB and
IASB,” Nobuo Kamata, Nanzan University

Kansai Region
Norio Takasu
University of Hyogo
The 61th Kansai regional meeting was held at University of Hyogo on December
10th, 2011.The main theme of the meeting was “Convergence of AccountingStandards and Accounting Information.”
The discussions were chaired and coordinated by Hisakatsu Sakurai, Kobe
University. The panel discussions were held as follows.
(1) “A Chang of Accounting Models and Accounting Information,” Masaki
Kusano, Kyoto University(2) “A Merger of Management and Accounting in Japanese Companies:
Concerning on Management Approach,” Motoko Shoji, Kansai University/ KPMG Azsa LLC(3) “The Issues of Cash Flow Statement and Future Prospect,” Toshiya
Tsuchida, University of Hyogo
In the morning we had five presentations in the two rooms as follows.
(1) “A Selection of Performance Indicators for Balanced Scorecards in Local
Authorities,” Tsuyoshi Sato, Hiroshima University (PhD. Candidate)(2) “An Analysis of the Literature on the Balanced Scorecard,” Takaharu Kawai,
Doshisha University and Sakichi Otomasa, Otaru University of Commerce(3) “The Influence of Introduction of IFRS (IAS) on Tax Accounting,” Kanako

37

Hikichi, Kwansei Gakuin University(4) “The Quality of Disclosure and Earnings Expectation of Investors,” Yu
Ishimitsu, kyoto Sangyo University(5) “Understanding of Accounting based on Complex Number Plane,” Toru
Muneoka, Kansai University

Kyushu Region
Keiichi Oishi
Kyushu University
The Japanese Accounting Association (JAA) Kyushu regional conferences are
regularly held twice a year - in late July and late March. This academic year, thesummer conference was held at Nagasaki University, and the early spring
conference was held at Seinan Gakuin University.
1. The 88th meeting at Nagasaki University, on 30th July, 2011.
(1) “The Way of the Tax Law and Tax Accounting Based on the Supreme Law,”
Tadashi Yuge, Kyushu Kyoritsu University(2) “The Development of Appraisal on Investment Plan for Venture in the E. I.
du Pont de Nemours and Company,” Shinichi Korogi, Kurume University(3) “Cost and Benefit of IFRS Implementation During Transitional Period:
Analysis of Survey Data from Japanese Listed Companies,” Chikako Ozu,
Kyushu University(4) “On the IFRS and Its Accounting Purposes,” Isamu Iwasaki, Kyushu
University
2. The 89th meeting at Seinan Gakuin University, on 24th March, 2012.
(1) “The Accountability of Lower Manager and Use of Accounting
Information,” Haruo Otani, Nagasaki University(2) “The Relationship between Accounting Standards and Corporate Tax Law:
On Their Gaps Expansion and Reduction in Japan,” Shigeru Hirakawa,
Kinki University(3) “Study of IFRS 2’s Residual Interest, Balance Concept of ASBJ Statement38

No.8, and Accounting Treatment on Equity Instruments and Equity
Warrant,” Toshiyuki Tanaka, Oita University(4) “Business Accounting and National Accounting: From the View Point ofLife Cycle Costing and Social Cost,” Nobuo Yazawa, Beppu University

39