Issued January 27, 2011 (No. 18)

Contents

1. Overview of ASBJ Meetings (210th Meeting – 213th Meeting)
2. ASBJ’s Comments on the Documents Issued by the IASB (October 1, 2010 –November 30, 2010)
3. ASBJ’s Project Plan Update
4. The AOSSG’s Activities
5. IASB holds its 29th Standards Advisory Council Meeting
6. ASBJ holds its Seventh and Eighth Sessions of a Series of Open Seminar(IFRS: The stance Japan should take on)
7. FASF holds its 11th Standards Advisory Council Meeting
8. Project Progress (As of December 16, 2010)

pg. 1
Copyright© ASBJ/FASF All Rights Reserved.

1. Overview of ASBJ Meetings (210th Meeting – 213th Meeting)(1) 210th Meeting (held on October 7, 2010)a. Discussion on the amendments to Accounting Standard for Quarterly Financial Statements(stakeholder hearings)
b. Progress of the Retirement Benefits Accounting Technical Committeec. Progress of the Technical Committee for Revenue Recognition
a. A hearing was held to hear views on the current quarterly reporting system and its possible
simplification from market participants. A preparer, a user, an auditor and an academic stated theirviews as witnesses and questions and answers followed.
The preparer witness pointed out several problems in the existing quarterly reporting system
including practical burdens and suggested the following:(1) requiring only reporting on the cumulative year-to-date basis.
(2) simplifying significantly for the first quarter and for the third quarter (such as elimination ofstatement of cash flows).
The user witness presented the results of the survey among analysts, commenting that eliminationof statements of cash flows for the first quarter and the third quarter could be accepted if theinformation such as depreciation expenses, impairment losses and capital expenditure, which areavailable only in that statement, would be provided in some other form.
The academic witness reported an empirical research that suggests the quarterly reporting system
reduces asymmetry of information and increases liquidity of stocks. The auditor witnesscommented on reviewability and possible simplifications.
b. The Board voted on whether to proceed with Step 1 (immediate recognition of actuarial gains orlosses on the balance sheet) of the project as previously scheduled. The Board agreed to go ahead
toward finalizing Step 1, considering advantages of early improvements to the financial reportingand steady progress toward convergence, while taking account of practical burdens arising fromchanges more than once.
c. The Board discussed the draft comments to the IASB exposure draft. While the Board generally
supports the efforts to develop the revenue recognition standard, concerns were expressed about
how to determine the transfer of goods or services, inclusion of credit risks in the amount oftransaction prices (revenues) and the treatment of product warranties as quality assurance
warranties.
(2) 211th Meeting (held on October 21, 2010)a. Progress of the Technical Committee for Financial Instruments (fair value measurement)b. Progress of the Technical Committee for Financial Instruments (financial liabilities)

pg. 2
Copyright© ASBJ/FASF All Rights Reserved.

c. Discussion on the amendments to Accounting Standard for Quarterly Financial Statements
d. Progress of the Technical Committee for Revenue Recognitione. Discussion on the IASB exposure draft Insurance Contractsa.

The staff outlined the comments received on the Exposure Draft of Accounting Standard for Fair
Value Measurements and Disclosures and the Board discussed how to respond to them.
Comments will be dealt with after analyzing and grouping into (i) issues that need further
considerations and (ii) issued that need additional guidance and (iii) issues that might needreconsideration subject to the IASB’s deliberations.

b.

The Board discussed financial liabilities for the first time. Following IASB’s finalization ofrequirements for financial liabilities in October 2010, the Board decided to undertake its own
discussions on classifications and measurements for financial liabilities, aiming at issuing thediscussion paper in the first quarter of 2011 to identify the direction of the amendments to
Accounting Standard for Financial Instruments.

c.

The Board discussed specific aspects of the simplification of quarterly financial statements,
including (i) whether reporting should be on the three months period basis or on the cumulative
year-to-date basis, (ii) whether to permit omission of statements of cash flows for the first andthird quarter and (iii) basic approach to revisions to notes disclosures and possible simplifications.

d.

The Board had a final discussion on the comments to the IASB exposure draft on revenue
recognition.

e.

The Board initiated a discussion on the draft comments on the IASB exposure draft on insurance
contracts.
(3) 212th Meeting (held on November 5, 2010)a. Discussion on the amendments to Accounting Standard for Quarterly Financial Statements
b. Progress of the Technical Committee for Revenue Recognitionc. Progress of the Lease Accounting Technical Committee
d. Discussion on the IASB exposure draft on insurance contracts

a. The Board discussed (1) whether quarterly income statements should be presented on the
cumulative year-to-date basis or on the three months period basis, (2) whether to permit omissionof statements of cash flows for the first and third quarter, and (3) elimination of several disclosure
requirements.

The Board decided to permit omission of statements of cash flows for the first andthe third quarter and will consider what non-cash items should be required.
b. The Board discussed the issuance of ASBJ discussion paper based on the IASB/FASB exposure
draft on revenue recognition issued in June.
c～d. The Board discussed the draft comments on the IASB exposure drafts Leases and Insurance
pg. 3
Copyright© ASBJ/FASF All Rights Reserved.

Contracts.
(4) 213th Meeting (held on November 18, 2010)a. Discussion on the amendments to Accounting Standard for Quarterly Financial Statements
b. Discussion at the Technical Committee for Revenue Recognitionc. Discussion at the Lease Accounting Technical Committee
d. Discussion at the Technical Committee for SPEse. Discussion on the IASB exposure draft on insurance contracts
a. The Board discussed the text of the exposure draft. It decided to require presentation of thequarterly income statement on the cumulative year-to-date basis, with voluntary disclosure of thethree months period information permitted.
At the previous meeting, there were discussions about the following:(1) when voluntarily providing information on the three months period basis, whether to require
disclosures of segment information, earnings per share and significant seasonable changes.
(2) when only reporting on the cumulative year-to-date basis, whether to require the informationsuch as sales, profits and earnings per share for the three months period.
The Board decided that the items (1) should be voluntary and the items (2) need not be required
because users could easily calculate them.
b. The Board discussed individual issues in the discussion paper, such as product warranties, sale of a
product with a right of return and revenues on a gross basis and on a net basis.
c. The Board discussed the comments on the IASB exposure draft as well as the ASBJ discussion
paper.
d. Comments received on the exposure draft about consolidation of ‘development-type’ SPE arereported and discussed. There were many respondents who suggested that there is no need to rush
into amendments at this time, in light of the progress of the IASB’s deliberations.
e. The Board had a final discussion on the comments on the IASB exposure draft.

2. ASBJ’s Comments on the Documents Issued by the IASB (October 1, 2010 –November 30, 2010)(1)

ASBJ submitted its Comments on the IASB Exposure Draft "Revene from Contracts with
Customers" (October 22, 2010)(2) ASBJ submitted its Comments on the IASB Exposure Draft “Insurance Contracts” (November
30, 2010)

pg. 4
Copyright© ASBJ/FASF All Rights Reserved.

3. ASBJ’s Project Plan Update
On December 17, 2010, the Accounting Standards Board of Japan (ASBJ) published the update of
the project plan through to 2011. The update this time is in response to the recent developments ofstandard setting and the IASB’s updated work plan as of November 29, 2010. It mainly updated theplans for the projects on which final pronouncements or due process documents were previously
scheduled to be issued in the 4th quarter of 2010.

4. The AOSSG’s Activities(1)

Launch of a web-site of the Asian-Oceanian Standard Setters GroupThe Asian-Oceanian Standard Setters Group (AOSSG) has launched the AOSSG web-site to enableeffective and efficient communication among its members and to raise awareness of the AOSSG
among outside stakeholders in the Asian-Oceanian region. The web-site was made available on
November 4, 2010 (http://www.aossg.org/index.php).
The AOSSG will update information on the web-site on a timely basis, on a wide range ofaccounting standard setting issues of relevance to entities in the Asian-Oceanian region, including
the activities of AOSSG Working Groups and on AOSSG comment letters to the IASB.
(2) Establishment of the Chairman’s Advisory Committee
On November 4, 2010, the AOSSG announced the establishment of the Chairman’s Advisory
Committee (the Committee) for the period until the next annual meeting. The objective of theCommittee is to provide assistance to the Chairman and Vice-Chair of the AOSSG for
administrating its operation, while maintaining the operational continuity of the AOSSG.
The Committee started off with eight members of the AOSSG, which consists of those from Japan,
Australia, China, Korea, Hong Kong, India, Malaysia, and Singapore. ASBJ Chairman Ikuo
Nishikawa, the Chairman of the AOSSG, chairs the Committee as well.
The Committee, in assisting the AOSSG’s operation, will address issues raised by the Chairman orVice Chairman, suggest agenda items for AOSSG meetings and working groups and advise the
Chairman on other matters, including whether to call special meetings.

5. IASB holds its 29th Standards Advisory Council Meeting
The 29th IFRS Advisory Council Meeting was held in London on November 3 - 4, 2010.
Attendants from Japan were two Council members, Seiichi Kaneko (Director of the Securities
Analysts Association of Japan) and Shozo Yoneya (representative of Nippon Keidanren, andCorporate Auditor, ITOCHU Corporation), and Makoto Sonoda (Deputy Director, Corporate
Accounting and Disclosure Division of the Financial Services Agency ) as an observer. The agenda
for the Meeting is shown below:

pg. 5
Copyright© ASBJ/FASF All Rights Reserved.

Time

AgendaNov. 3

Overview of last four months

10:10-11:50-

Report of the Chair and Vice Chairs

IASB Update by Chairman David Tweedie
Public consultation on the IASB’s proposed post-2011 work

11:50-12:45

plan
13:40-14:15

Monitoring Boards’ governance review of the IFRS Foundation

14:30-16:45

Dealing with the complexity of cross-cutting issues-

Discussion in small groups

16:45-17:30

Research project on IFRS 2 Share-based Payment

Nov. 4

Meeting with representatives of the Trustees

9:10-10:30
Dealing with the complexity of cross-cutting issues

10:55-11:40-

Report back from the break-out sessions

11:40-12:50

Advisory Council performance review

12:50-13:10

A rethink of the process/timing for developing new standards

The main focus of discussion at the meeting was on “Dealing with the complexity of cross-cutting
issues.” Discussions were undertaken in four groups. The groups reached consensus on the following
points:(1)

Cases of Significant Inconsistency-

Recycling or not recycling the other comprehensive income (OCI)-

Discrepancy in the notion of control (consolidation, revenue recognition and derecognition)(2) Insufficient Conceptual Framework
Since most of inconsistencies between standards results from deficiencies in the conceptual
framework, the IASB should give higher priority to its Conceptual Framework project to address
those problems.
(3) Permissible Inconsistency
Inconsistencies between standards results from difference in how each standard has been developed
and which business model each standard focuses on. It is acknowledged that it is impossible toaddress all the inconsistencies under the current situation. What is very important here is that theBoard should sufficiently explain, in Basis for Conclusions, the reason behind the Board’s approvalof the standard that contains some inconsistencies with other standards from a viewpoint of why it
has not eliminated the inconsistency with the Conceptual Framework or other standards, as well asthat of the background and circumstance of the specific project.
In the session of Monitoring Board’s governance review of the IFRS Foundation, Mr. Makoto
Sonoda (Deputy Director, Corporate Accounting and Disclosure Division) gave presentation.

pg. 6
Copyright© ASBJ/FASF All Rights Reserved.

6. ASBJ holds its Seventh and Eighth Sessions of a Series of Open Seminar(IFRS: The stance Japan should take on)
The ASBJ and FASF, starting this year, host the ASBJ Open Seminars on “Development of IFRS
and its Adoption in Japan” in major cities through Japan. The objectives of the Seminars are toprovide up-to-date information about global trends in accounting, which can be presented only by
the ASBJ who is able to timely follow the trends, and thereby contribute to promotion ofenvironment for successful IFRS adoption as well as to improve services to the members of FASF.
The latest seminars were subtitled “IFRS: The stance Japan should take on” were held in Tokyo (atYomouri Hall) on November 2, 2010 and in Osaka (at Osaka Bankers Associations) on November 4,
2010.

The topics discussed were “Challenge in implementing IFRS - impact on business

management” presented by IFRS Foundation Trustee Noriaki Shimazaki, the ASBJ project update by
ASBJ Chairman Ikuo Nishikawa, and the IASB exposure drafts on revenue recognition and lease(the MoU projects between the IASB and the FASF) by Vice chairman Atsushi Kato. The seminars
were attended by more than 1300 people (the total number of the attendance for two sessions).
The seminar program in Tokyo is shown as below:
The 7th Seminar in Tokyo (Yomiuri Hall) on November 2, 2010
Title

Speaker

Challenge in implementing IFRS

Noriaki Shimazaki, Special Advisor of Sumitomo~ impact on business management ~Corporation, Trustee of the IFRS Foundation, andChairman of International Affairs Committee of the
IFRS Council of Japan

ASBJ’ s Activities

Ikuo Nishikawa, ASBJ Chairman

Development of the IASB standard setting

Atsushi Kato, ASBJ Vice Chairman(revenue recognition, leases)
IFRS Foundation Trustee Noriaki Shimazaki spoke of the background of the discussion toward the
IFRS implementation and the recent development, including the Trustees Meeting held in Seoul in
October 2010. He emphasized the need for Japan to play an active role in conveying their views on
the IASB’s standard setting, citing several examples.
ASBJ Chairman Ikuo Nishikawa gave a presentation about the ASBJ’s activities, with a focus on the
ASBJ Project Plan updated in September 2010, referring to IASB’s work plan as its background.
ASBJ Vice Chairman Atsushi Kato commented on the IASB Exposure Draft “Revenue fromContracts with Customers” and “Leases”, outlining the background and features of the proposals andthe differences from the Japanese standard.

pg. 7
Copyright© ASBJ/FASF All Rights Reserved.

7. FASF holds its 11th Standards Advisory Council Meeting
The 11th Standards Advisory Council Meeting was held on November 11, 2010. The Meeting beganwith a report on the ASBJ’s recent activities, followed by an exchange of views regarding

thedelays of the IASB’s projects and the ASBJ’s deliberation on simplification of the Quarterly
Financial Statements. Then, explanations were given about international activities, including the 2nd
AOSSG Meeting held in September 2010, the National Standard Setters (NSS) Meeting, and theWorld Standard Setters (WSS) Meeting. Furthermore, Council Member Yoshinori Kawamura(Professor, Waseda University) reported the 2010 survey results, followed by an exchange of viewson the public-sector accounting and the way to release the survey results. Finally, the establishmentof the Panel on Non-consolidated Financial Statements was reported, followed by an exchange ofviews on the development in that discussions.

pg. 8
Copyright© ASBJ/FASF All Rights Reserved.

8. Project Progress (As of December 16, 2010)
2010
Q4

2011
Q1

2011
Q2

2011
Q3

2011
Q4

Items related to the remaining differences between existing Japanese GAAP and IFRSs
Business Combinations (Step2)ED
Final
Intangibles
ED
Final
Items related to projects addressed in the MoU between the IASB and the FASB
1 Scope of Consolidations
ED
2 Financial Statement Presentation- Phase B- Discontinued Operations
ED
3 Revenue Recognition
DPED
4 Liabilities and Equity Distinctions
5 Financial Instruments
ED- Classification and Measurement of
Financial Assets- Classification and Measurement of
Financial Liabilities- Impairment

DP2

ED
ED
ED

- Hedging
6 Fair Value Measurement
Disclosure
7 Post-employment Benefits

Final

and

Final

- Step 1- Step 2
8 Leases
9 Derecognition

DP
DP

ED
ED

DP

ED

Items related to the IASB projects other than those addressed in the MoU between the
IASB and the FASB
Provisions
Emission Trading Schemes
Insurance Contracts
Items other than those addressed by the IASB and the FASB
Special Purpose Entities
Final
Quarterly Financial Statements
ED
Final
Subsequent EventsED
Final[Legend]DP
Discussion Paper
DP2 Advanced Discussion Paper (It is a document presenting preliminary views in the form near toa standard before the development of exposure drafts.)
ED
Exposure Draft
Final Accounting Standard/Guidance etc.
Italicized legends indicate finished events.

pg. 9
Copyright© ASBJ/FASF All Rights Reserved.

“ASBJ Newsletter” (No. 18)
Issued on January 27, 2011
Editor: Shousaku Shimomura
The views expressed in ASBJ Newsletter are not necessarily those of the ASBJ or the FASF. The
Authors and Publishers accept no responsibility for any loss or damage resulting from reliance on theviews expressed herein.
© Copyright, ASBJ/FASF All Rights Reserved
Website: https://www.asb.or.jp/asb/index_e.jsp
E-mail: publicity@asb.or.jp
Accounting Standards Board of Japan / Financial Accounting Standards Foundation
Fukoku Seimei Building 20F, 2-2, Uchisaiwaicho 2-chome, Chiyoda-ku, Tokyo, Japan (Zip Code:
100-0011)

pg. 10
Copyright© ASBJ/FASF All Rights Reserved.