“The voluntary nature of IFRS usage in Japan means that this report provides very useful insight into the cost/benefit evaluation undertaken by major Japanese companies before deciding to proceed with IFRS. It is encouraging to see so many Japanese companies recognising the substantial benefits that come with using IFRS as the globally recognised set of accounting standards.”
These were the words of Hans Hoogervorst, Chairman of the International Accounting Standards Board, commenting on the press release by Japanese FSA on the Publication of ‘IFRS Adoption Report’.
Since 2010, many Japanese companies have been reporting using IFRS as issued by the IASB. The press release from the Japanese Financial Services Agency (FSA) highlighted a study that tracked the number of Japanese firms that have chosen to report using IFRS since 2010. As of March 2015, the number stood at 75. In the last two years, the number of these Japanese companies has actually doubled. The number is expected to increase to more than 100 companies by the end of 2015, representing greater than 20% of total market capitalisation.
However, the motivating factors for companies to choosing to adopt IFRS voluntarily include:
- Efficiency in business management
- Enhanced comparability with competitors
- Better communication with international investors
- Better describes business performance
- Facilitates greater access to international finance