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Table of Contents
Acronyms
Introduction
I. Japanese System of Accounting
to 1997
A. Key Foundations
Commercial Code (CC)
Securities and Exchange Law (SEL)
Corporate Income Tax Law
Principal Objectives
B. Historical Development Since 1945
Allied Occupation
Requirement for Independent Audits (1974)
Requirement for Consolidated Financial Statements (1977)
C. Accounting Standards in Three Key Areas
Consolidations
Fair-value Accounting
Pension Accounting
II. Reasons for Accounting Changes
Since 1997
A. Accounting and Auditing Weaknesses
Business and Regulatory Environment
Loopholes and Weaknesses in Accounting Rules
Weak Auditing Practices
B. Internationalization and Innovation
Globalization of Investing and Financing
International Accounting Standards (IASs)
Financial Market Innovations
C. Big Bang Financial System Reforms
Bad Loan Crisis
Financial Scandals and Bankruptcies
Big Bang Announcement and Implementation
III. Critical Evaluation of Accounting
Reforms
A. Examination of Accounting Changes in
Three Major Areas
Consolidations
Fair-value Accounting
Pension Accounting
B. Effects of Accounting Changes
Corporate Restructuring
Revisions to Post-employment Benefits
C. Remaining Weaknesses
Government's Reluctance to Radically Change
Triangular Legal System
Differences with International Standards
Ministry of Finance Control
Auditors and Corporate Governance
Conclusion
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