10 June 2011

IASB and ASBJ announce their achievements
under the Tokyo Agreement and their plans for closer co-operation
The International Accounting Standards Board (IASB) and the Accounting Standards Board of Japan(ASBJ) have announced their achievements under their August 2007 Memorandum of Understanding(MoU), known as the Tokyo Agreement, to improve International Financial Reporting Standards(IFRSs) and Japanese generally accepted accounting principles (GAAP) and to bring about theirconvergence.
The boards, meeting in Tokyo on 6 and 7 June 2011, also announced their intention to deepen their cooperation in preparation for a decision around 2012 on the mandatory application of IFRSs in Japan.
Some Japanese domestic companies are already permitted to prepare financial statements inaccordance with IFRSs.
At the meeting Sir David Tweedie, chairman of the IASB, and Ikuo Nishikawa, chairman of the ASBJ,
expressed their belief that their boards’ work for the convergence of their standards was an important
step on the path towards Japan’s possible adoption of IFRSs and noted that the ASBJ’s continuing
participation in the IASB’s standard-setting process contributes significantly to the development of asingle set of high quality global accounting standards. A summary of the results of the Tokyo
Agreement so far is attached. This initiative will continue to seek further convergence of IFRSs andJapanese GAAP.
The representatives of the boards also discussed the remaining projects, including those in the MoU,
between the IASB and the US national standard-setter, the Financial Accounting Standards Board(FASB), including revenue recognition, leases, financial instruments and insurance contracts, as wellas interpretation and practical issues relating to the voluntary application of IFRSs in Japan.
As Sir David Tweedie and two other members of the IASB, Warren McGregor and Tatsumi Yamada,
will end their term of duty at the end of this month, Ian Mackintosh, vice chairman-elect of the IASB,
and Takatsugu (Tak) Ochi, member-elect of the IASB, also took part in the meeting to help tomaintain the close relationship between the IASB and the ASBJ. The IASB’s director of international
activities, Wayne Upton, who has also been involved in this initiative, were also present at the meeting.
In working together under the Tokyo Agreement the boards have strengthened their relationship andmade good progress towards the goal of global accounting standards for use in capital markets. TheIASB and the ASBJ agreed that they should continue the effort for convergence and establish a closer
relationship.
Commenting on the meeting, Sir David Tweedie, said:
The achievements under the Tokyo Agreement represent a major milestone in our joint work
to improve and align international and Japanese financial reporting standards. Over the past
four years, the ASBJ has not only changed many Japanese standards to conform to theirinternational equivalents but under Ikuo’s direction has also been very influential in thecurrent debates on new IFRSs. Our attention now turns to deepening the relationship between
the IASB and the ASBJ in preparation for a decision in 2012 on Japanese adoption of IFRSs.
Ikuo Nishikawa, said:
We are pleased to announce the achievements under the Tokyo Agreement today and greatly
appreciate Sir David Tweedie, all other IASB members and staff for their continuous support
for our convergence work.
Sir David Tweedie will be greatly missed; however, we will continue our efforts to converge
with IFRSs and our discussions with the IASB and its new leaders.

The next meeting of the boards is scheduled for Q4 2011 in London.

EndPress enquiries:
Sonja Horn, Communications Manager, IFRS Foundation
Telephone: +44 (0)20 7246 6463
Email: shorn@ifrs.org

AppendixAchievements under the Tokyo Agreement between the IASB and the ASBJIn March 2005 the IASB and the ASBJ launched a joint project to eliminate differences between
IFRSs and Japanese GAAP with the aim of contributing to the development of global capital markets
by promoting further international convergence to high quality accounting standards. Since then, bothboards have proceeded with the project and continued to hold joint meetings twice a year. In August
2007 Sir David Tweedie, chairman of the IASB, and Ikuo Nishikawa, chairman of the ASBJ, jointly
announced an agreement (the Tokyo Agreement) to accelerate convergence of IFRSs and Japanese
GAAP.
As part of the agreement, both boards agreed to seek to eliminate by 2008 major differences between
Japanese GAAP and IFRSs (as defined in the assessment of equivalence made for the EuropeanCommission in July 2005 by the Committee of European Securities Regulators (CESR)), with theremaining differences to be removed on or before 30 June 2011. Whilst the target date of 2011 does
not apply to any major new IFRSs now being developed that will become effective after 2011, bothboards will work closely to ensure the acceptance of the international approach in Japan when the newstandards become effective.
With the target date of the Tokyo Agreement approaching, Sir David Tweedie and Ikuo Nishikawa,
together with Ian Mackintosh, who will become the vice-chairman of the IASB from July, affirmed
today the achievements under the agreement. The ASBJ would wish to enhance further its
relationship with the IASB and to continue its close cooperation. In response, the IASB has agreed tocontinue a close relationship. The cooperation of the two boards in the development of high quality
financial reporting standards will contribute to the growth of global capital markets.
Achievements under the Tokyo Agreement to date
The ASBJ has published discussion papers on items that the IASB has deliberated as early as possible
to solicit comments from Japanese constituents and has discussed those items with the IASB so as toensure that the international approach will be accepted in Japan. In addition, the ASBJ has activelyparticipated in the IASB’s standard-setting process both by supporting the IASB’s outreach activities
in Japan and, as the current chair of the Asian-Oceania Standard-Setters Group, by gathering the viewsof the Asia-Oceania region on IASB projects. In doing so, the ASBJ has contributed effectively to theglobal accounting standard-setting process and has ensured that the views of the ASBJ wereconsidered by the IASB.

(1) Short-term convergence projects
In July 2005, in connection with the equivalence assessment by the European Commission, the CESR
recommended changes to financial statements prepared in accordance with Japanese GAAP. Under
the Tokyo Agreement, the goal to eliminate the differences or provide compatible accounting
standards for those items identified by the CESR was set to reach a conclusion by 2008.
For this purpose, the ASBJ issued following new or revised accounting standards and completed thetarget in 2008.
Item

ASBJ’s developments

Construction contracts

Issued new standard in December 2007

Uniformity of accounting policies (associates)

Issued new guidance in March 2008

Financial instruments (disclosure of fair values)

Issued revised standard in March 2008

Asset retirement obligations

Issued new standard in March 2008

Measurement of post-retirement benefits
obligation

Issued revised standard in July 2008

Inventory cost

Issued revised standard in September 2008

Fair value disclosure of investment property

Issued new standard in November 2008

Business combinations – STEP 1

Issued revised standard in December 2008

Intangibles (In-process R&D)

Issued revised standard in December 2008

(2) Other convergence projects
Under the Tokyo Agreement, other convergence projects consist of two parts. The first part is toachieve convergence on the remaining differences between Japanese GAAP and IFRSs, identified byboth boards as major differences, except for the short-term convergence projects as described in (1)above, with a target date of 30 June 2011.
For this purpose, the ASBJ has issued (or expects to issue) the following new or revised accounting
standards and as a result is expecting to substantially achieve the target.
Items

ASBJ’s developments

Segment reporting (adoption of managementapproach)Issued new standard in March 2008

Retrospective applications

Issued new standard in December 2009

Presentation of other comprehensive income

Issued new standard in June 2010

Business combinations – STEP 2

Expects to publish exposure draft in Q3 2011

Intangible assets

Expects to publish exposure draft in Q3 2011

The second part is about possible differences arising from the current IASB’s major projects todevelop new IFRSs which would become effective after 2011. Both boards will work closely toensure the acceptance of the international approach in Japan when those new IFRSs become effective.
For those possible differences mainly arising from the MoU projects between the IASB and the FASB,
both boards have a common understanding and shared concerns through the discussions at their halfyearly meetings.
The following table shows current status of both boards on these items.
Item

IASB’s current status

ASBJ’s current status

Classification andmeasurement: IFRSs - issued forclassification and measurement inNovember 2009 and in October
2010, respectively
Impairment:
Financial instrumentsED - published in November 2009 DPs - published for classification andmeasurement of financial assets andSupplement published in January financial liabilities in August 2010
and in February 2011, respectively
2011
Hedge accounting:ED - published in December 2010
Offsetting:ED - published in January 2011

Fair value measurementand disclosure

IFRS - issued in May 2011

ED - published in July 2010

Consolidations

IFRS - issued in May 2011

DP - published in February 2009

LeasesED - published in August 2010

DP - published in December 2010

Revenue recognition

ED - published in June 2010

DP - published in January 2011

Post-employmentbenefits

IFRS - expected to be issued inJune 2011

ED - published primarily for
immediate recognition of
unrecognised items on the balance
sheet as a first step in March 2010

DP - published in October 2008
Financial statement
presentation (Phase B)

The project will be reviewed aspart of its agenda consultation
process

Financial instrumentswith the characteristics
of equity

The IASB will review the futureof the project in the light of its
agenda consultation

Closely monitoring the IASB and theFASB’s discussionInsurance contracts

ED - issued in July 2010

Closely monitoring the IASB and theFASB’s discussion

Provisions (IAS 37)

The IASB will review the futureof the project in the light of its
agenda consultation

DP - published in September 2009

Emission trading
schemes

The IASB will review the futureof the project in the light of its
agenda consultation

Closely monitoring the IASB and theFASB’s discussion

DP - published in July 2009

Notes to editors
About the IASBThe IASB was established in 2001 and is the standard-setting body of the IFRS Foundation, anindependent, private sector, not-for-profit organisation. The IASB is committed to developing, in thepublic interest, a single set of high quality global accounting standards that provide high qualitytransparent and comparable information in general purpose financial statements. In pursuit of thisobjective the IASB conducts extensive public consultations and seeks the co-operation of internationaland national bodies around the world. The IASB has 15 full-time members drawn from 11 countries
and a variety of professional backgrounds. By 2012 the Board will be expanded to 16 members.
Board members are appointed by and accountable to the Trustees of the IFRS Foundation, who arerequired to select the best available combination of technical expertise and diversity of international
business and market experience. In their work the Trustees are accountable to a Monitoring Board ofpublic authorities.

About the ASBJ
The Accounting Standards Board of Japan (ASBJ) was established in July 2001 as a private sector
organisation. Accounting standards developed by the ASBJ are to be authorised by the Financial
Services Agency as part of generally accepted accounting principles (GAAP). The ASBJ develops
accounting standards and implementation guidance that appropriately reflect the environment in whichbusiness enterprises operate. The ASBJ also communicates with corresponding organisations abroadand contributes to the development of global accounting standards. For more information about theASBJ, visit the Website at https://www.asb.or.jp/asb/top_e.do .