The publication of Interim IFRS Roadmap

2159 comparability should not be confused with uniformity as comparability means that like things should look alike and different things should look differentBarth 2008. It is obvious that there are major international differences existing in accounting practices and the possible causes of differences might not be completely deleted even if we adopt the international accounting standardsAlexander, and Nobes 2009. Therefore, IFRS, if to be adopted in Japan, must faithfully reflect the economic reality of businesses and trade practices in Japan, as well as the global financial and capital market. So the continuing convergence is still emphasized in the Interim IFRS Roadmap. On the other hand, though the interim IFRS Roadmap show a stance of acceptance of IFRS, there still left a lot of problems to be tackled including the above issues indicated in the report because of existing differences between IFRS and Japanese GAAP and the cause of the difference which may not be deleted entirely. As we know, accounting standards can be regarded as fully functional only if financial reports are appropriately prepared. Therefore, when the way of adoption, especially mandatory application is to be determined, the feature of Japanese accounting, the situation of Japanese companies, the difference between IFRS and Japanese GAAP, and other related issues should be understand, just as it is made clear in the Interim IFRS Roadmap: ……Japan must be prepared to take on the issue of mandatory application of IFRS from a broad range of perspectives, defining the path to be taken in the case of making the use of IFRS by a certain range of Japanese companies mandatory, while attending to the various aforementioned conditions in Japan and abroad……

4. The feature of Japanese accounting

In this section, we will analysis the major environmental factors that influence companies‘ accounting practices – to be specific, factors that directly influence the incentive to implement IFRS, the feature of Japanese accounting, and the major difference between IFRS and 2160 Japanese GAAP so that we can acquire an understanding of relevant issues which should be considered in making the final decision on whether and how IFRS should be required to be complied with. First, a large list of possible causes of international differences can be found in the writings of previous researchers e.g. Choi and Meek, 2005, Nobes C and R Parker, 2008. For example, the most frequently referred factors that might influence the accounting development are cultures, legal environment, providers of finance, taxation, profession of accounting profession and other external influences such as economic, political events and international influences. Though international influence seems to be the most influential factor which spurred the adoption of IFRS in a world wide scope, in both countries with a strong equity market and weak equity market, however accounting standards are not set to follow the fashion. Among all the above factors that affect accounting development, financing system, to be specific, the providers of finance, apart from international influences has been regarded as the main explanatory variable for the most important international differences in financial reporting. In countries, where capital provided by banks or family company is very important, the banks or family company may nominate directors and thus be able to obtain restricted information and to affect decisions. In this case, the need for published information is much smaller because of this access to private information. In other countries where the major source of corporate finance has been the share capital and loan capital provided by large numbers of private investors, especially foreign investors, there is relatively strong requires for unbiased information about the success of a business and its state of affairs. It is reasonable to assume that companies with different capital structures might have different opinion on IFRS. Japan seems to be a unique case. It has a fairly important equity market, although not as important as that in the US or the UK. Furthermore, many Japanese companies own shares in each other, and so the total number of listed companies and market value is exaggerated when making an international comparison. Thus, to understand the major finance resource of