1. Financial Reporting in Different Countries Saturday, July 09, 20161

2. Learning Objectives  Explain the most important domestic and international influences on financial reporting in different countries.  Describe the local GAAP in different countries.  Explain the general characteristic of accounting in different countries.  Outline the principal differences between country accounting rules and IFRSs. Saturday, July 09, 20162

3.  To group countries according to the common elements and distinctive characteristics of their financial accounting systems. Saturday, July 09, 20163 Review of selected classification studies  Muller(1967) identified the following four approaches to accounting development in Western market-oriented economies. –Under the macroeconomic approach –Under the microeconomic approach –Under the independent discipline approach –Under the uniform approach

4. Saturday, July 09, 20164 Review of selected classification studies

5. Saturday, July 09, 20165 Review of selected classification studies  Nobes’ classification is consistent with certain environment factors discussed earlier in Chapter 1.  Others Legal Systems: Common Laws vs. Code Law Accounting Practice Systems: Fair Presentation vs. Legal Compliance Accounting Gray’s accounting values and Hofstede’s cultural dimensions

6.  This chapter more closely examines accounting in a few selected countries. (France, Germany, Dutch, Japanese, U.K.,U.S.A).  What--- characteristics  Why--- environmental factors  How---regulations, convergence Saturday, July 09, 20166 Review of selected classification studies

7.  What--The Characteristics of Japan Accounting  Law-based  Government, Tax, Legal  Macro-uniform Saturday, July 09, 20167 Japan Accounting

8.  What--The Characteristics of Japan Accounting The national government has a significant influence on accounting in Japan; Triangular legal system Bank credit and debt capital to finance large enterprises--Culture. Creditor and shareholder protection. Saturday, July 09, 20168 Japan Accounting

9.  What--The Characteristics of Japan Accounting The national government has a significant influence on accounting in Japan Two separate government agencies(The Ministry of Justice; The Financial Services Agency) have responsibility for accounting regulations; administer the Company Law, and the Securities and Exchange Law respectively. Central government exerts tight control on business affairs, including accounting. Saturday, July 09, 20169 Japan Accounting

10.  What--The Characteristics of Japan Accounting Triangular legal system P153-155 The Company Law The Securities and Exchange Law The Corporate Income Tax Law  The further influence of Japanese corporate income tax law. Saturday, July 09, 201610 Japan Accounting

11.  What--The Characteristics of Japan Accounting Triangular legal system The Company Law The Company Law is administered by the Ministry of Justice. Development from German commercial law. Creditor and shareholder protection is its fundamental principle, with an unequivocal reliance on historical cost measurements. Disclosures on credit-worthiness and availability of earnings for dividend distribution are of primary importance. Saturday, July 09, 201611 Japan Accounting

12.  What--The Characteristics of Japan Accounting Triangular legal system The Securities and Exchange Law Company Law requires large companies to prepare consolidated financial statements. Listed companies must prepare consolidate financial statements under the Securities and Exchange Law. Generally requires the same basic statements as the Company Law plus a statement of cash flows. However,under the Securities and Exchange Law, consolidated financial statements are the main focus. Saturday, July 09, 201612 Japan Accounting

13.  What--The Characteristics of Japan Accounting Triangular legal system P153-155 The Corporate Income Tax Law  The influence of the tax code is significant. As in France and Germany, expense can be claimed for tax purpose. Taxable income is based on the amount calculated under the Company Law, but if the law does not prescribe an accounting treatment, the one in the tax law is often followed. Saturday, July 09, 201613 Japan Accounting

14.  What--The Characteristics of Japan Accounting Bank credit and debt capital to finance large enterprises Culture: Group consciousness and interdependence in personal and corporate relationship in Japan. Japanese companies hold equity interests in each other,and often jointly own other firms. These interlocking investments yield giant industrial conglamerates—notely the Keiretsu.Banks are often a part of these industrial groups. Saturday, July 09, 201614 Japan Accounting

15.  What--The Characteristics of Japan Accounting Bank credit and debt capital to finance large enterprises The widespread use of bank credit and debt capital to finance large enterprises, and corporate managers must primarily answer to banks and other financial institutions rather than shareholders. Saturday, July 09, 201615 Japan Accounting

16. A mixture of domestic and international influence. Japanese culture, business practices, and history. In the first half of the 20 th century, accounting thinking reflected German influences; in the second half, U.S. ideas were pervasive. A Big Bang was announced in the late 1990s to make the economic health of Japanese companies more transparent and to bring Japan more in line with international standards. Saturday, July 09, 201616 Japan Accounting

17. A mixture of domestic and international influence. Japanese culture, business practices, and history. The accounting reforms--keiretsu business model is being transformed since the structural reforms that began in1990s. The Securities and Exchange Law model was imposed on Japan by the United States during the U.S. occupation following World War Ⅱ and aimed at investment decision-making. More recently, the effects of IASB,and in 2001 a profound change occurred with the establishment of a private sector accounting standard setting organization. Saturday, July 09, 201617 Japan Accounting

18.  How? Regulation and Enforcement Financial statements Convergence Saturday, July 09, 201618 Japan Accounting

19.  How?--- Regulation and Enforcement Accounting profession P152-153 Accounting Regulation--- Triangular legal system the Company Law the Securities and Exchange Law P153-155 the Corporate Income Tax Law Saturday, July 09, 201619 Japan Accounting

20.  How?--- Regulation and Enforcement Accounting principles and practices P155-156 Convergence P156-157 Saturday, July 09, 201620 Japan Accounting