Japanese manufacturers ‘need more time’ for IFRS switch

MANUFACTURERS in Japan have demanded more time to implement International Financial Reporting Standards as fears have grown over the 2015/16 deadline.

Multinationals such as Sumito Corp have already moved over to the global standards after voluntary use for listed companies was introduced in 2010, The Daily Yomiuri reports.

The Japanese Financial Services Agency and Financial Accounting Standards Federation initially proposed a three-year switch over period, after which use of IFRS would become mandatory for listed companies.

They argued holding off on IFRS adoption would make Japanese companies look guilty of failure to disclose adequate information at a time when many other countries were switching.

However, last month 22 companies and organisations – including heavyweights Mitsubishi, Nippon and Toyota – wrote to the head of the FSA asking for more time, and describing the change over as “a significant burden”.

Asset-rich manufacturers are particularly worried about the switch as is requires new accounting practices for land and facilities, future profits and estimated values, among other things.

Many voices in Japan are calling for the swift introduction of global standards to increase international influence and “avoid unfavourable revisions for Japanese companies”.

However, there are still a number of issues to iron out, some of which reflect those being debated in the UK, such as the time-frame of the change over and whether non-listed companies should use the global standards.

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Fiona Westwood of Smith and Williamson.