Japanese

ACCOUNTING FORUM2011

No. 19JAPAN ACCOUNTING ASSOCIATION

Japan Accounting Association.
Liaison Office: Hayashi Building, 1-10 Kanda Nishiki-cho, Chiyoda-ku,
Tokyo 101-0054, Japan
Copyright© 2011, Japan Accounting Association

Japanese ACCOUNTING FORUM 2011
JAPAN ACCOUNTING ASSOCIATION

Preface
Japanese ACCOUNTING FORUM of Japan Accounting Association (JAA) is
published annually to publicize academic activities of JAA in English. The firstissue of Japanese ACCOUNTING FORUM was published in 1993. This edition for2011 is the 19th issue of Japanese ACCOUNTING FORUM.
This issue contains the summary of presentations at the 69th Annual Conferenceof JAA which was hosted by Toyo University in Tokyo on September 8-10, 2010. It
also includes the reports of regional activities of JAA during the 2010 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 (2011)
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 2011

International Committee and2011 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

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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
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. 19,2011

CONTENTS
Preface

Yoshihiro Tokuga(1)

Mikio Akiyama(9)

Report2010 Annual Conference

Plenary Sessions
Plenary Session 1: Internationalization of Accounting and Rules for Rule
MakingSetting and Enforcement of Global Accounting Standards
Keiichi Oishi(11)

Katsunobu Mandai(12)What Normative Research in Japan should be?

Evaluation of Financial Accounting Standards Based on Empirical Researches
Hisakatsu Sakurai (13)Globalization of Accounting Standards and Meta-Rule of Accounting Standards
Eiko Tsujiyama (14)Plenary Session 2: Revolution in Research and Education of Management
Accounting
The Trend of Management Accounting Research in Changing Environment
Fumiko Hiki (16)6

Global Environmental Issues and Change of Management Accounting Research
Katsuhiko Kokubu (17)Educational Dilemma of Management Accounting in Accounting School
Masaaki Aoki

(18)

Present Situation and Problem of Management Accounting Education in Private
Graduate School of Accountancy
Yoshitaka Kobayashi (19)Plenary Session 3: Revolution in Auditing in a Changing Environment for
Business Management
The Manifestation and Regulation of the Professional Skepticism
Yoshinao Matsumoto(20)

Ethical Behavior and Skepticism in the Current Audit Practice
Aiko Sekine (21)
Auditor’s Professional Skepticism and Its Developments
Akira Nin

(22)

Complicated Professional Judgment and Professional Skepticism
Shinji Hatta (23)Special Committees
Study of Decision-Making for Environmental Management and Accounting
SystemKatsuhiko Kokubu (24)
A Study on Usefulness of Fair Value Measurements
Keiko Kitamura (25)7Subject Research Committee
An Inventory of Financial Accounting Research in Japan－Changing International Research Trends－
Yoshihiro Tokuga (26)Study Groups
Institutional Basis of Accounting Standards and Current Nature of GAAP
Hideki Fujii(27)

Research on Intangibles from the Perspectives of Management Accounting－Focused on Corporate Reputation－
Michiharu Sakurai (28)

Regional Reports
Hokkaido Region

Koichiro Matsumoto

Tohoku Region
Kanto Region
Chubu Region
Kansai Region
Kyushu Region(30)

Hiroshi Fujinaga (30)
Yoshio Nishino (31)Akihiro Noguchi (31)Atsuo Mukoyama (32)
Keiichi Oishi (33)82010 Annual Conference of JAA
Report2010 Annual Conference
Chairman of 2010
Annual Conference

Mikio Akiyama
Toyo University
Program
The 69th Annual Conference (2010) of the Japan Accounting Association (JAA)
was hosted by Toyo University on September 8th to 10th, 2010 in Bunkyo-ku,
Tokyo. The main theme of the conference was “Changes in Business Management
Environment and Revolution in Accounting”.
On September 8th, meeting of the Council and General Assembly of Membershipwere held. Soon after the end of those events, reports by two Special Committees,
two Study Groups and One Subject research Committee were presented. In theevening of the day, the reception was held at Tokyo Dome Hotel.
Through September 9th to 10th, three plenary sessions were held under the main
theme described above in the area of financial accounting, management accounting
and auditing. In addition to these plenary sessions, 106 concurrent sessions
including 12 sessions for graduate students were held. And 4 international sessions
by Korean Accounting Association (KAA) members and Taiwan Accounting
Association (TAA) members were also held. It was the first time for JAA to haveinternational session at the Annual Conference based on the Memorandum ofUnderstanding (MOU) with KAA and TAA.
In the afternoon of September 9th, special speech titled “Japanese Culture in theWorld” by distinguished speaker, Donald Keene, Emeritus Professor of Columbia
University and academic adviser to Toyo University was offered. On September
10th, at the end of the Conference, ASBJ session titled “Tasks and Perspectives on
the Development of Japanese Accounting Standards in View of the Adoption of
IFRS” was held.
Total registrants to the conference were about one thousand and more than two
thousand and five hundred in total for three days attended academic programs andothers.

9The Schedules for 2010 Annual Conference was as follows;

Date and Time
Sept.712:00 - 13:00
13:00 - 15:00
15:00 - 17:30
Sept.810:00 - 12:00
12:00 - 14:30
14:40 - 15:20
15:30 - 16:10
16:20 - 17:00
18:30 - 20:30
Sept.99:50 - 11:30
9:50 - 12:00
13:00 - 13:40
14:00 - 16:10

Sept.10

9:50 - 11:30
9:50 - 12:00
13:00 - 15:00
15:30 - 17:30

EventsCommittee for New Membership
Screening Committee for Awards
Meeting of Board of Directors
Meeting of Council
General Assembly of Membership
Special Committee Reports
Study Group Reports
Subject Research Committee Report
Reception [at Tokyo Dome Hotel]
International Session
Concurrent Sessions
Special Speech by Dr. Donald Keene
Plenary Sessions
1.Internationalization of Accounting and Rules for Rule
Making
2.Revolution in Research and Education ofManagement Accounting
3.Revolution in Auditing in a Changing Environment
for Business Management
International Session
Concurrent Sessions
Plenary Panel Discussions
ASBJ Session

10

2010 Annual Conference of JAA

Plenary Session 1:
Internationalization of Accounting and Rules for Rule Making

Setting and Enforcement of Global Accounting Standards
Keiichi Oishi
Kyushu University
Accounting standards have the nature of de facto rules which are spontaneously
formed through contractual practices in the capital market, but some complementarystandardization by non-contracting parties on behalf of market participants is needed
due to the “collective action” problems. Although this complementarystandardization could be done as either self-regulation or government regulation,
costs and benefits of formulating rules are different between the private sector andthe state. Therefore, based on such a cost-benefit consideration, the state should
decide whether to formulate its own rules or to delegate to the private sector. Even if
the state decides to “outsource” the formulation of rules, it will try to carry out its
policy through enforcement. This “outsourcing of norm formulation” hypothesis has
some relevance at the national level.
On the other hand, global regulation relies on the network regulation, which isbased on the agreement among sovereign states and international regulatory bodies,
and which is also dependent on non-governmental entities. IASB is now on the“nodal point” of such networks, and the formulation of accounting standards is
outsourced to IASB from the states, regions, and regulatory bodies. In addition, the“modernization of government” (e.g. NPM) which has been promoted around theworld has increased the importance of accounting-based control for governments. As
a result, the states have begun to require the accounting standards to contribute tonational governance as well as global governance, and these changes have brought
new tensions at the national, regional, and global levels. A good example is thetrouble over the setting, enforcement, and endorsement of the PFI accounting
standards in the UK and EU.
In this changing environment, IASB must carry out the difficult task ofdeveloping a “single set of high quality” global standards credible to market
participants while balancing various (sometimes conflicting) requests frominternational regulatory networks, regional authorities, and sovereign states.

11

What Normative Research in Japan should be?
Katsunobu Mandai
Hitotsubashi University
Normative accounting research in the U.S. had started from 1930’s and been themainstream in accounting research for a long time. But empirical research which has
started from 1970’s is the mainstream now. On the other hand normative research inJapan is the mainstream now. We will discuss what normative research in Japan
should be in order to continue to be the mainstream in accounting research.
Accounting research should satisfy three required conditions to contribute to
evolving a paradigm, i.e. (1) accounting research should be done in accordance witha common paradigm, (2) a conclusion found by research should be agreed with byothers, (3) accounting research should be related to an empirical world. If
accounting research is done in accordance with a common paradigm, we can discuss
its merits in terms of its simplicity and systemic. Therefore superior one will survive
and evolve the paradigm. If a conclusion is agreed with by other researchers, it will
be stored as our common knowledge. We should form a theory which explains cause
and effect between an empirical world and basic accounting concepts or accounting
standards.
In evaluating consistency of accounting standards, we should analyze thoseincluding basic accounting concepts in order to judge a paradigm shift has occurredor not.

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Evaluation of Financial Accounting Standards
Based on Empirical Researches
Hisakatsu Sakurai
Kobe University
This presentation analyzes the advantages and limitations of the attempts that try
to evaluate the financial accounting standards based on the findings of empiricalaccounting researches. From this point of view, researches are divided into thefollowing three categories. First group of researches investigate whether if theaccounting standard enhances the level of qualitative characteristics of accounting
income information such as value relevance, timeliness of recognition, time series
properties, and close relation to cash flow. Second type of researches provides theevidence of economic consequences brought by accounting standards that should be
evaluated through due process of standard setting. Third group of researches
evaluates the accounting standard positively if the accounting information invented
by the standard promotes the capital market function by mitigating the perception of
information asymmetries among market participants. Evaluation based on empiricalresearches has the advantages of both persuasiveness of judgment supported byevidence and possibility of scientific settlement among inconsistent evidence. Theseadvantages, however, are limited to ex post evaluation, and do not extend to ex anteevaluation of the standard under consideration. Besides, empirical researches cannot
bring the conflicting interests among stakeholders automatically into unity without
negotiation through due process.

13

Globalization of Accounting Standards andMeta-Rule of Accounting Standards
Eiko Tsujiyama
Waseda University
The IASB (International Accounting Standards Board), established in 2001 has
worked very enthusiastically to converge national accounting standards andInternational Accounting Standards. Consequently, in 2010 the IASB revised article
2(d) of its constitution from “to bring about convergence of national accounting
standards and International Accounting Standards …” to “to promote and facilitate
adoption of IFRSs (International Financial Reporting Standards) ….”Ironically at the same time, however, a doubt was cast by the world on thecompatibility between the standardization of accounting standards and the adequacyof quality of such accounting standards in terms of information needs. The IASB
and its predecessor, the IASC (International Accounting Standards Committee)
aimed to set accounting standards exerting importance on stocks and fair value. Dueto the conflict between this new paradigm and the conventional model, the nine joint
projects, which the IASB and the FASB (Financial Accounting Standards Board)
aimed to complete by 2011, are in difficulties. In 2011, U.S. is to judge whether toadopt IFRS for U.S. corporations. Therefore, the IASB is encountering a dilemma
whether to continue the same stance based on the new paradigm from now on or tocompromise with the conventional model that is easily understood by the market.
Corresponding to the above mentioned issue, the IASB is now at a major crossroadwith encountering the doubt about the necessity for convergence/adoption.
The financial accounting session themed “globalization and the standards ofstandard setting” was held under the 69th JAA (Japanese Accounting Association)
annual conference that carried a main conference theme as “change of management
environment and accounting reforms.”
The issues assigned to my presentation at this session were that to review theactivities of the IASB and the IASC, and to examine which can or cannot be changedin accounting under the globalization of economies. I attempted to approach theseissues through examining the contents of individual projects that are perused by the
IASB and the FASB under the slogan of convergence of accounting standards.
The content of this presentation includes:
1. Meta-rule of accounting standards

14

2. Globalization of accounting standards and the new accounting paradigm of
IFRS
3. Precedence of value or profit
4. The significance of accrual accounting
5. Revenue recognition project
6. Fair value measurement project
7. Concluding remarks15

2010 Annual Conference of JAA

Plenary Session 2:
Revolution in Research and Education of Management
Accounting

The Trend of Management Accounting Researchin Changing Environment
Fumiko Hiki
Hitotsubashi University
This paper firstly discussed the trend of management accounting research in Japanin the 21st century in connection with changing environment. In recent years,
against the back drop of the revised legal systems and the worsening global
environmental problems, researches on healthcare organizations, public sectors, andservice industries have increased. One of the characteristics in research methodology
adopted by these management accounting researches is that, while there is atendency of decline in the number of normative or descriptive research, the numberof case study or action research is increasing.
Secondly, I investigated what kind of the innovative changes were coming up in
management accounting research. The change of management accounting researchwhich can be seen in the trend of it is, firstly, re-attention of and systematic research
on Japanese management accounting. Quantitative methodology in addition toqualitative methodology was applied to researches on these topics, and several
researchers began to conduct some action research. The adoption of these researchmethodologies can be considered as the second transformation. Thirdly, practicing
professionals became making a presentation at the annual conference of Japan
Accounting Association.
Finally, I discussed what sort of change would be required.

16

Global Environmental Issues andChange of Management Accounting Research
Katsuhiko Kokubu
Kobe University

In this presentation, first the environmental issues are examined based on Niklas
Luhmann’s social theory. Through the analysis, it is pointed out that transforming
environmental issues into economic performance by environmental management
accounting is essentially important in order to internalize environmental aspects
within functionally differentiated systems. However, the existing environmental
management accounting is not enough strong to stimulate economic organizations to
conduct environment conservation. In order to overcome this problem, it isnecessary to change management accounting research and education throughintroducing the perspective of publicness. In conclusion, it is proposed to construct
the discussion arena for environmental and economic issues by environmental
management accounting information.
If accounting researchers are responsible for global environmental issues, weshould not avoid discussing negative aspects of accounting system on environmental
destruction. If there were little relationship between accounting system andenvironmental problems, accounting researchers would not have much chance tocontribute these issues. However, if the economic system, which is supported byaccounting system, were one of the core causes for environmental destruction,accounting researchers should have to explore the path to overcome. Based on thesystem theory by Luhmann and the publicness theories, I suggested the newviewpoint for management accounting research for constructing a new area for theenvironment. The social system theory indicates the limitations of environmental
management accounting, but the publicness theories suggest some possibilities toovercome them by constructing discussion area through environmental management
accounting information.

17

Educational Dilemma of Management Accounting
in Accounting School
Masaaki Aoki
Tohoku University
The principal objective of accounting school is to educate students who want tobe professional accountants in the future. The curriculum of accounting school isdrawn up so as to give students necessary knowledge to be professional accountants.
Especially, social and students’ needs, which are likely to be disregarded in
traditional graduate school, are important for accounting school education. Society
and students demand us a new educational service. It brings about the educational
dilemma we have not met yet.
I summarize the discussion of my presentation. First, I clarify the characteristicsof accounting school education by focusing on the difference between the traditional
graduate school and accounting school education. Next, I examine the cause of theabove dilemma and show that this dilemma may give rise to the serious problems inmanagement accounting education. I suggest my idea to resolve the educational
dilemma. There are two key points in my proposal, namely, a) adaptation to theenvironmental changes surrounding us and b) utilization of the subjects peculiar toaccounting school curriculum (Case Study). Finally, I mention the bright prospect of
the accounting school.
The accounting school has many accounting subjects in its curriculum.
Accounting school students can learn practical knowledge and balanced knowledge
about financial accounting, management accounting, and audit. It implies that wecan bring up new types of researchers who are familiar with all the field of
accounting and practice. I believe that accounting school will contribute not only tothe education of professional accountants but also to the education of accounting
researchers.

18

Present Situation and Problem of Management Accounting
Education in Private Graduate School of Accountancy
Yoshitaka Kobayashi
Waseda University
The purpose of the graduate school of accountancy is to educate a talented person
who can play an active part in various fields with deep accounting knowledge. But
in realty most of the applicants are those who plan to take a CPA (Certified public
accountant) examination. And demand market for the education of graduate schoolof accountancy is very small by several reasons. Most of the graduate schools of
accountancy have trouble filling the quota of entrance.
Private graduate school of accountancy is required to cover the cost of theeducation by single school or in certain group of schools. In the case of Waseda,
single school profitability is required. Since main revenue sources are paymentsfrom students, the numbers of quota and school fees turn out to be big.
From the constraints of revenues, the increase of number of professors and the
expansion of courses are difficult. In order to enrich the courses under these
constraints, we sought the way to cooperate with firms including the donatedcourses.
In Waseda, we classify the courses into the fundamental, core, business andapplication. Though most students plan to take CPA examination, many students
register in courses in business and application which do not have direct connections
with CPA examination.

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2010 Annual Conference of JAA
Plenary Session 3:
Revolution in Auditing in a Changing Environment for
Business Management

The Manifestation and Regulation of the Professional Skepticism
Yoshinao Matsumoto
Kansai University
2002 revised Japanese Auditing Standard prescribed the “professional
skepticism” in addition to the “due care” as the duty of an auditor and provided thatthe detection of material misrepresentation was synonymous with the expression of
conclusion about the fairness as a purpose of the financial statement audit. The
professional skepticism that was one of the mental attitudes of the auditor came tobe emphasized with relation to a purpose of the detection of misrepresentation. In
this paper, we studied (1) how the auditor should demonstrate the due professionalcare and the professional skepticism in an audit process, and (2) how to judge
whether the skepticism was demonstrated and how to regulate such skepticism.
The due professional care is defined as a level of the care that naturally an auditor
should pay as a professional of audits. An auditor should pay such care in the audit
process as an average or careful professional auditor, and it is a level of theprospective care in general. As the exertion of such due care by the auditor isoriented toward that the level of every audit becomes above the standard, it would
function as a standard of the responsibility judgment if the legal responsibility of theauditor becomes the issue subsequently.
And this due care requires an auditor to exert the professional skepticism, whichmeans that an auditor continues always having doubt whether information and theevidence obtained suggest generation of material misrepresentation with the fraud.
Therefore, the auditor is required the following two phases.
(1) In all audit processes which the auditor accomplishes as a professional, thedue professional care is required as a general duty for the professional auditor.
(2) At the phases of choice and application of each audit procedure, which
includes critical evaluation of audit evidences, the auditor never forget doubt
as a part of the mental attitude (questioning mind).

20

Ethical Behavior and Skepticism in the Current Audit Practice
Aiko Sekine
Certified Public Accountant
In our country, ethical behavior in the audit practice is stipulated in the JICPA
Code of Ethics, and independence from the audit client is also stipulated.
Independence comprises “independence of mind” and “independence inappearance.” Independence of mind is defined as the state of mind that permits theexpression of a conclusion without being affected by influences that compromise
professional judgment, thereby allowing an individual to act with integrity andexercise objectivity and professional skepticism.
Maintaining professional skepticism has also been stipulated in the auditing
standards. It emphasizes maintaining professional skepticism in relation to material
misstatement, especially due to fraud, and related practical guidelines exist.
However, there seems to be some fraud when skepticism is not necessarily
sufficiently maintained. It is considered that there might be some difficult issues
with regard to maintaining professional skepticism in order to address fraud in theaudit practice. At the same time, it is considered that, due to such difficult issues,
auditors should maintain professional skepticism, and how to address fraud isconsidered as a practical issue which auditors should deal with.
In order to deal with this issue, it is obviously important to follow the provisions
described above, but, at the same time, the auditors should really understand themeaning of the provisions and having an independent mind is important. However,
it is also important to understand that those are not all inclusive and that there would
still be threats.

21

Auditor’s Professional Skepticism and Its Developments
Akira Nin
The University of Kitakyusyu
At the inception of 21st century, expectations on the audit practices become
more demanding (e.g., POB O’Malley Panel, 2000), and then the auditor would
have to ex ante assume dishonesty in the auditees’ mindsets. A brainstorm seeking
US SAS No. 99 (2002) includes the forensic and fraud preventive contexts, interalia, “regardless of any past experience and regardless of the auditor’s belief about
management’s,” the context in question would reflect the “inward-directed”
mindsets metaphysically argued by Bell et al. (UIUC & KPMG, 2005). Professional
Skepticism (PS) on the presumptively doubting auditor’s attitude would admittedly
trigger the knowledge degradation or destruction process. Auditor’s judgment would
be made dichotomously between “belief resetting (to null)” by the exertion of PS,
and “anchoring (Tversky & Kahneman, 1974)” risk i.e., wrong, unintended
accumulation of belief. Even though we revert to the auditing classic of Mautz andSharaf (AAA, 1961), the core of PS cannot be thoroughly clarified. And we shouldtell the auditor’s skeptical points of view from that of philosophers’. Concerning theinherent fragility on auditor’s judgments with latent factors, the profession should
ensure the value to stand on the safe side, i.e., effectiveness (β risk averse) overefficiency (α risk averse). In such rigorous, modern audit environment, the author
would anticipate the natural increase of costs by introducing stern PS, commensuratewith the “heightened assessment of the risk that (auditee) assertion is correct” asargued recently in risk bound way, in several researchers’ theses, typically (e.g.
Nelson, AJPT 2009).

22

Complicated Professional Judgment and Professional Skepticism
Shinji Hatta
Aoyama Gakuin University
I reported next four themes mainly. The first theme is “Re-examination ofauditing systems with innovative changes of business accounting”. I examined thesituation that the radical revision of accounting standards and auditing standards
cannot be avoided because of major bankruptcies in the mid-1990s. The second
theme is “Complicated Professional judgment with innovative changes of auditing
environment”. I pointed out the situations that auditors require new andtremendously technical and advanced responses because of tremendously innovativechanges of auditing environment. For example, the auditors’ responsibility ofdetection of fraud is enhanced and auditors should give substantive judgment. The
third theme is “Maintaining the quality of auditing service and auditors’
responsibility”. I pointed out the situation that auditors who ensure auditor
independence strictly require professional skepticism in all phases because ofmaintaining the quality of auditing above a certain level. The last theme is “Thenature of auditors’ professional skepticism”. I summarized the discussion in the
United States of America and I pointed out the situation that auditors require
professional skepticism moreover because of the expectation that auditors will
enhance the ability of detection of fraud.
Finally, I pointed out the situation that re-examination of auditors’ role is near athand and made a proposal that a study or an approach about the clarification of theauditors’ role matching the present situation is urgent issue. In this way, I believethat the public confidence about accounting and auditing system will be grown.

23

2010 Annual Conference of JAA
Special Committee

Study of Decision-Making for Environmental Management
and Accounting System
Chair: Katsuhiko Kokubu
Kobe University

The objective of this committee is to study how the way of decision making forenvironmental management is promoted and improved by accounting systems to
combine the environment with economy. Environmental management
decision-making is carried out by companies, but at the same time external
stakeholders support those environmental conscious companies through their own
decision-making. Therefore, the co-operation between these two groups is essentially
important. This committee placed importance on both of these perspectives, andcarried out in-depth and separate studies of “accounting systems supporting
environmental management decision-making of companies” (Part I) and “accounting
systems supporting environmental management decision-making in the society” (PartII). The studies in the report are categorized into three groups depending on the
progress of its research area, 'basic research', and 'advanced research', 'developing newtechnique'. In Part I, the chapters on design for environment (Ch.3) and environmental
performance measurement (Ch.5) are constructed as 'basic research', and environmental
conscious production (Ch.1), environmental capital investment appraisal (Ch.4) andgreen supply chain management (Ch.6) are conducted as 'advanced research'. In thestudies of environmental conscious operation improvements (Ch.2) and environmental
externalities management (Ch.7), 'developing new technique' is pursued. In Part II, thechapters on non financial
disclosure (Ch.8), influence of soil contamination
information on stock price (Ch.11) and management supporting depuration for soil
contamination (Ch.12) are constructed as 'basic research'. Emission trading and carbon
management (Ch.10) and CSR management (Ch.13) are conducted as 'advanced
research'. In the studies on eco-indicator for investors (Ch. 9) and environmental
accounting for regional development (Ch.14) 'developing new technique' is pursued.

24Special Committee

A Study on Usefulness of Fair Value Measurements
Chair: Keiko Kitamura
Chuo University
Fair value accounting is one of the most controversial issues in the current
accounting standards. This report discusses the history of accounting standards andthe fair value measurements in several countries.
In U.S., “fair value” changed as the concept drifted from the utility rate-setting
context (the case of Smyth v. Ames, 1898) to that of financial reporting (ARB43,
1953). Under ARB43, fair value measurements were used for accounting standards
for non-monetary transactions, etc.
In 2006, FASB issued SFAS 157 and defined fair value as the price that would bereceived to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. IASB defined fair value as anexit price, too. In other countries, for example, UK, EU and Japan, the concept of
the fair value was introduced when they established accounting standards forfinancial instruments or converged with IFRS.
Nowadays, fair value should be used to measure not only financial assets but
operating assets. In addition, the introduction of fair value measurements makes
important changes in income statement presentation and disclosures.
The next question is what discount rate should be used to calculate present value
as an alternative of exit price. So far, we have seen that implied cost of capital ismore appropriate than other methods.
In the 2011 final report, we will discuss the limitation of fair value measurementsfrom the empirical point of view.

25Subject Research Committee

An Inventory of Financial Accounting Research in Japan－Changing International Research Trends－
Chair: Yoshihiro Tokuga
Kyoto University
The Subject Research Committee of the Japan Accounting Association wasorganized in September, 2008. We have set two main tasks as our goals: One is to do
an inventory of the financial accounting research available in Japan and from this tochart its historical changes and characteristics. The other is to go a step further byidentifying strong and weak areas that will be useful in guiding and helping
Japanese financial accounting research progress to the international standards,
though we also feel that international standards should not be the only criteria used
to judge quality. We hope to keep the good characteristics of Japanese research,while improving our international competitiveness.
Concerning the first task, we classified 2,353 research papers published in the
Journal "Accounting" since 1978, for a period of 30 years, into six categories asfollows: 1. Analytical Research and Methodology, 2. Empirical Research, 3.
Normative and Descriptive Research, 4. Historical Studies, 5. Case Studies, and 6.
Miscellaneous. We did a pilot study the first year and extend it to all papers the next
year. We focused on normative and descriptive research this year because theywould seem to be the mainstream of research in Japan, judging from thecontinuously overwhelming number of papers we categorized into this area.
Moreover, we classified and analyzed the sample papers with a focus on their“scientific nature” and “evolvability” and sub-classified them based on theirresearch topic. We also extend our analysis to all papers in Accounting Progress to
avoid journal bias regarding empirical research.
To accomplish the second task, we clarified the problems that were found in our
analysis of Normative and Descriptive Research and Empirical Research, and madea proposal for improvement. On the one hand, it has been difficult to modify or
evolve the dominant hypothesis because there was no verifiable way of discussing
empirical facts, related to Normative and Descriptive Research in Japan, though we
believe Japan has had a big advantage internationally in this research area. On theother hand, we found a major problem in that there have been quite a lot of papers
with unclear subjects, related to Empirical Research, which we believe places Japan
at an international disadvantage.
To improve the current situation, we propose that refereed journals in Japan26

should adopt a minimum “scientific nature” as a screening criterion and that
educational systems be established that contribute to the advance of research that
follows accepted scientific procedures. If we become more aware of the fact that
Normative and Descriptive Research is able to provide “scientific explanations”, we
can establish a complementary relationship between Normative and Descriptive
research and Empirical Research. By building on these ideas, financial accounting
research in Japan, including empirical research, will hold a strong position incomparison with the current international standards, which are biased toward
empirical research.

Study Group

Institutional Basis of Accounting Standards andCurrent Nature of GAAP
Chair: Hideki Fujii
Kyoto University
In 2010, we completed our research program, especially by adding to our interim
report 2009 two chapters; i.e. chapter 7, Current Issues in Fair Value Measurement,
and chapter 8, Toward the Comparative Institutional Analysis of Internal Auditing.
Through our two-year study, we could get a whole picture and better understandingof institutional change in current accounting; e.g. the convergence of accounting
standards led by the FASB and the IASB, and installing new internal auditing by the
SOX Act in the U.S. and the J-SOX in Japan.
In the last chapter of our final report, by summarizing discussions of the Group
members, we present hypothetic explanation for dynamism of institutional change inaccounting. We could suppose two factors that drive the change; (1)objective-rational behavior (ORB) of market players such as investors, managers
and accountants, who have in common self-interested orientation, and (2)value-rational behavior (VRB) of system designers such as standard setters,
regulators and law makers, who act to realize institutionally their ideals and beliefs
at the cost of economic rationality if necessary. The basic idea of the discussion isbased on M.Weber [1922], “Sozilolgische Grundbegriffe,” in Wirtschaft undGesellschaft, Tübingen, J.C.B.Mohr.
In a stable and peaceful period, it would be ORB that would determine
accounting system and its function in economic society. The institutional change

27

here would consist of relatively small and/or minor adjustments of accounting
system, e.g. revision of accounting standards. But, once the economic society would
suffer catastrophic disaster such as Enron/WorldCom and Lehman Shocks, VRB
would intervene directly into economic life of market players, and introduce bigbang change in accounting institution to save the market economy itself. The
conflict between these two factors would generate dynamic, and sometimes
inconsistent, development of accounting system and characteristic change in GAAP
(from descriptive to normative) currently observed on the global dimension.

Study Group

Research on Intangibles from the Perspectives ofManagement Accounting－Focused on Corporate Reputation－
Chair: Michiharu Sakurai
Josai International University
A study group titled Research on Intangibles from the Perspectives ofManagement Accounting was established at the annual meeting of JAA held on
September 2008. This paper is a short summary of its final report, Research ofManagement Accounting on Intangibles, focused on Corporate Reputation. The
report was published on September 2010. Members of the committee are listed at thebottom of this paper.
This report is the final one which the study group has presented at the annual
meeting of Japan Accounting Association on intangibles from the perspectives ofmanagement accounting. The contents of this report consist of four parts;
introduction (Part 1), intangibles (Part 2), corporate reputation (Part 3) and finally,
analysis of questionnaire (Part 4).
Part 1: Research methodologies of intangibles and reputation management werediscussed from the perspectives of management accounting. Firstly, the reportargues that value drivers of excess profitability are not intellectual assets but
intangibles. Secondly, it proposes that intangibles are divided into two parts;
intellectual intangibles and reputation-related intangibles.
Part 2: The report discussed intellectual assets, not brand equity but under the title of28

study of intangibles. It discussed how to manage intangibles from strategic point ofview. It also discussed the role of corporate social responsibility (CSR) andmeasurement of its economic effect. It reviewed the way of managing human,customer, and organizational assets. At last, it analyzed the results of empiricalresearch on intellectual assets.
Part 3: The report discussed the contents of reputation-related intangibles. There aremany issues which reputation management brings forward, but this report reviews
management accounting issues from multi-stakeholder perspectives. In addition, it
studied the differences between shareholder capitalism and stakeholder capitalism.
From these studies, it clarifies ways of reputation management and impact onfinancial performance. It also clarified characteristics of reputation management interms of brand management. Furthermore, it made research on the ways of brandvalue -budget management. Finally, it discussed both reputation management inpublic sectors and public accountability from the perspective of budget-outcome
relationship.
Part 4: The report clarified the result of questionnaire study. In sum, the study group
discussed intangibles which includes not only human, information andorganizational assets that interim report of this study group discussed but also brandmanagement, reputation management, intellectual assets, corporate communication,and customer assets management from the perspectives of management accounting.
Chairman of the Committee; Michiharu Sakurai (Josai International University)
Committee members; Akimichi Aoki (Senshu University), Takayuki Asada (Osaka
University), Takashi Arae (Nihon University), Katsuhiro Itoh(Seikei
University), Kazunori Itoh (Senshu University), Yoshihiro Itoh (Waseda
University), Hironao Iwata (Senshu University), Akihiko Uchiyama(Chiba University), Asako Kimura (Kansai University), Masakazu
Kozakai (Tamagawa University), Tomoaki Saonoda (Keio University),
Yoshiomi Someya (Josai International University), Masahumi
Fujino(Nihon University), Akiko Iwabuchi (Tokyo Management College)
Discussants; Junya Ohnishi (MOF), Kyoko Kanesaka (Dentsu), Norio Sawabe(Kyoto University), Hidetoshi Takaba (Syuwa accounting firm),
Shoichiro Hosomi (Tokyo Metropolitan University), Kazuhiro Mawatari(Dentsu)29

2010 Annual Conference of JAA
Regional Reports

Hokkaido Region
Koichiro Matsumoto
Hokusei Gakuen University
The regional meetings were held in 2010 as follows.

1. The 77th Regional Meeting at Hokusei Gakuenn University on May 22, 2010.
(1) “ A Study on Accounting for Sale-Leaseback Transactions, ” Takaya Kudo,
Hokkai-Gakuen University.
(2)“Environmental Accounting for Logistics,”Tadashi Nagaoka, Sapporo Gakuin
University.
(3)“Uncertainty in an Auditor's Judgment: Focusing on Going-Concern Problems,”Akira
Sakayanagi, Otaru University of Commerce.
2. The 78th Regional Meeting at Sapporo TV Tower on December 11, 2010.
(1)“Overreaction and Underreaction to Reductions of Contributed Capital: Twists

Due to Accountings for Business Combination, Preferred Stock, and Treasury
Stock,”Go Ishikawa, Otaru University of Commerce.
(2)“Two Different Views of the Liability,”Junji Kubo, Hokkaido University.
(3)“Some Impacts of Global Convergence of Accounting Standards on The Tax System
in Japan,”Shinichiro Ishizaka, Hokkaido College, Senshu University.

Tohoku Region
Hiroshi Fujinaga
Aomori Public College
The Tohoku Region of Japan Accounting Association covers the north eastern(Tohoku) area of the main land.
In 2010, following two meetings were held.

30

1. The 78th Meeting at Tohoku Gakuin University on May 29, 2010.
(1) “Significance and Issues of the Global Tax Planning as the Strategy ’’, Daigo
Matsumoto, Graduate student, Aomori Public College(2) “Process of Adoption in Accounting for Asset Retirement Obligations and Issues inJapan’’, Tomoko Okano, Ishinomaki Senshu University.

2. The 79th Meeting at Sendai Garden Palace on November 20, 2010.
(1) Study of Medical Balanced Scorecard in the Managemennt of a Hospital’’,Yoshimi Iwasa, Graduate student, Aomori Public College(2) “Conservatism in Accounting for Inventory’’, Hisashi Takase, Iwate University.

Kanto Region
Yoshio Nishino
Kanto Gakuin University
The 58th regional meeting was held at Kanto Gakuin University on December 4,
2010.The main theme of the meeting was “The Status Quo and Problems of the
Accounting Standards of Nonbusiness Organizations’’. Discussions werecoordinated by Shinya Saito, Yokohama National University.
The following reports and panel discussions were presented.
(1) “The Status Quo and Problems of the Accounting Standard of Public Interest
Corporation’’, Katsuyoshi Okamura, Kanagagawa University.
(2) “The Status Quo and Problems of the Accounting Standard of Private School’’, Satoru
Katayama, Waseda University.
(3) “The Status Quo and Problems of the Accounting Standard of “NPO’’ (Specified
Non-Profit Juridical Person) ’’, Hiroshi Eda, CPA.
(4) “The Status Quo and Problems of the Accounting Standard of Consumer
Cooperative’’, Tetsuya Fukuda, Kanto Gakuin University.

Chubu Region
Akihiro Noguchi
Nagoya University
The regional meetings were held as follows;31

1. The 123rd Regional Meeting at Nagoya University on April 3, 2010.
(1) “Safety Management in Health Care Services and Quality Costs: Focusing on Ex ante
Input Costs for Prevention and Appraisal”, Toru Hashiguchi, Nihon Fukushi
University.
(2) “How Japanese Business dealing with the application of the IFRSs”, Ikuhiro Sato,
Yamaha.

2. The 124th Regional Meeting at Tokai Gakuen University on July 10, 2010.
(1) “Current Issues and the Future of XBRL Chain”, Tetsuo Tabata, Tokai Gakuen
University, and Katsuhiko Yuura, Hitachi.
(2) “Accounting Treatment and Value Relevance of R&D Costs towards the Convergence
to Selective Capitalization”, Tomohiro Noguchi, Aichi Gakuin University.
(3) “A Further Inquiry into the Headstream of the Japanesque Bookkeeping: Searching in
East Asia”, Takaharu Tanaka, Mie Prefectural Tamaki Wakaba School.
(4) “An Analysis on Economic Rationality of Conservatism”, Kazuhiro Manabe, Fukui
University of Technology, and Nishiumi Satoru, Aichi Gakuin University.

3. The 125th Regional Meeting at Nagoya Gakuin University (ShiratoriCampus) on December 4, 2010.
Theme: Accounting and Auditing Issues on the Globalization of the Society andthe Economy
Moderator: Kenji Kishida, Nagoya Gakuin University.
(1) “Analysis of the Introduction of Accounting for Asset Retirement Liabilities”,
Yukinori Ueda, Nagoya Gakuin University.
(2) “Effect of the Convergence toward IFRSs for Financial Information of the JapaneseBusiness”, Ichiro Mukai, Aichi Gakuin University.
(3) “Analysis of the Introduction of IFRS”, Toshihiko Shiraki, Nanzan University.
(4) “Effect of the Application of the IFRS on Accounting and Auditing Practices”,
Tsuyoshi Takeyama, Tokai Chapter of the JICPA.

Kansai Region
Atsuo Mukoyama
Osaka City University
The 60th Kansai regional meeting was held at Osaka City University on
December 18th, 2010. The main theme of the meeting was “Landing point of32

Japanese Accounting Regulation -Harmonization of Accounting from Managements’aspects and Accounting from Investors’ aspects-”.
The discussions were chaired and coordinated by Kenji Shiba, Kansai University.
The panel discussions were held as follows.
(1) “Mutual Influence between Investment Style and Accounting System”, Satoshi
Tomita, Kansai University.
(2) “Conflict of interests between shareholders and managements: An inspection from afinancial theory and a practical business”, Hisao Miyagawa, Osaka City University.
(3) “Role of an Enterprise, Role of Accounting”, Kenji Shiraishi, Doshisha University.
(4) “A Simultaneous Determination Theory of Corporate Decisions and Asset Pricing andAccounting Information”, Hiroji Takao, Osaka University.

In the morning we had six presentations in the two rooms as follows.
(1) “A Study of Legitimacy of Global Accounting Standards -A New Analytical
Framework”, Masatsugu Sanada, Kyoto University (PhD. Candidate).
(2) “Restructuring Scheme of A Timber Farming Company by using of Carbon Offset
Credits”, Akira Kajiwara, Otemon Gakuin University.
(3) “A Study on Judgment of External Auditor for Japan Airlines Corporation”, Takumi
Adachi, Onomichi University.
(4) “The role of management accounting in strategizing -A case study from developing
new business domain-”, Li Yan, Ritsumeikan University (PhD. Candidate).
(5) “Comparison of theoretical reduced manufacturing costs for each method ofstandardizing parts”, Kousuke Shiomi, Hiroshima University (PhD. Candidate).
(6) “Values and Limitations of the Accounting Standards of “Special Accounts” inJapanese Central Governments”, 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 early August and late March. This academic year, the summer
conference was held at Kumamoto Gakuen University, and the early spring conference washeld at Kyushu Sangyo University.
1. The 86th meeting at Kumamoto Gakuen University, on August 7, 2010.

33

(1) “Disclosure and Value Relevance of Other Comprehensive Income Information:
Comparison between Japan, U.S. and Europe”, Yuki Yamanishi, Prefectural Universityof Kumamoto.
(2) “An empirical analysis of the influence that management control system andcorporate culture affect organizational member's psychological factor in Japan”,
Tsutomu Tobita, Kumamoto Gakuen University.
(3) “On the US's Global Accounting Strategy”, Isamu Iwasaki, Kyushu University.
2. The 87th meeting at Kyushu Sangyo University, on March 26, 2011.
(1) “Trend of Elite Accountants’ Education in China”, Bunchu Ri, Fukuoka Institute ofTechnology, and Kunio Chiyoda, Kumamoto Gakuen University.
(2) “The Position of Time Study in Management Accounting Research”, Tamiya
Mizushima, Nakamura Gakuen University.
(3) “The latest Movement of Accounting Standard for Provisions in IASB”, Toshifumi
Yamashita, Saga University.

34