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(Contents)
I Overview of financial reporting in Japan and
study approach and focus
1. Factors affecting financial reporting
(1) Business environment and requirements for financial reporting
(2) Issues arising from requirements of multiple accounting systems
(3) Concerns about the credibility of financial reporting
(4) Recent developments for financial reporting system in Japan
2. Importance of useful and reliable financial reporting
(1) Impact on industrial competitiveness
(2) Impact on public
3. Study approach
and focus
II Issues to be addressed in order to enhance
the usefulness and reliability of financial reports, and possible measures
1. Improvement of efficiency in the accounting system and further enhancement
of disclosures to achieve internationally competitive level
(1) Triangle system
1) Integration of disclosure requirements under the Commercial Law and
the Securities and Exchange Law
2) "Kakutei Kessan Shugi" (requirements for tax filing based
on financial statements approved by shareholders)
(2) Further enhancement of disclosure to reach internationally competitive
level
1) Enhancement of MD&A information disclosures
2) Implementation of risk information disclosures
(3) Permission to adopt the US Generally Accepted Accounting Principles
and the International Accounting Standards
2. Enhancement of credibility of financial reporting process
(1) Disclosure of top management's responsibility over preparation of
financial statements
1) Awareness of top management's responsibility over preparation of
financial statements
2) Disclosure of top management's responsibility over preparation of
financial statements
(2) Enhancement of credibility of financial reporting process
1) Importance of risk management system (internal control) for ensuring
reliability of financial reports
2) Disclosure of internal control structure and effectiveness
3) Initiatives to establish internal control framework in Japan
(3) Disclosure of corporate governance structure to ensure the reliability
of financial reports
(4) Maintenance of the reliability of external audits
1) Enhancement of the transparency of the process of appointment and
dismissal of external auditors
2) Disclosure of external auditors' fees paid to audit and non-audit services
3. Enhancement of the monitoring system for financial reporting and
other measures
(1) Enhancement of the monitoring system for financial reporting
(2) Other measures
III Conclusion
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