Accounting in Japan

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What factors do you consider to be primarily responsible for the Japanese accounting system being significantly different from other national systems and what influences do you consider the Japanese system will have on international accounting in the future?

INTRODUCTION Japan as an accounting jurisdiction is characterized by the dominance of the state (Haller and Raffournier, 2003). The accounting rules have been set out in the past fifty years as statute law with an implicit objective that accounting should contribute to the growth of the national economy (Haller and Raffournier, 2003). Until recently, the accounting profession had played a minor role in shaping accounting practices, and he accounting profession and auditing practice was created by law after World War II as a discipline needed to reactivate the securities market in Japan (Haller and Raffournier, 2003). Going back in time would show that industrialization of Japan began in 1868 after the Meiji Restoration (Nobes and Parker, 2004). In 1890 and 1899, the first Commercial Code was established based on a Franco-German model and oriented towards creditors and tax collection (Nobes and Parker, 2004). A deeper look at Japan 's accounting and financial reporting reflects a mixture of a number of domestic and international influences (Choi et al., 1992), with the first half of the twentieth century having the accounting thinking drawing influences from France and Germany (Lawrence, 1996), and the second half from the United States, that emphasizes on shareholder information (US) (Choi et al., 1999). Because Japanese accounting system bents more to tax influences, it is classified as the uniform accounting approach (Choi et al., 1992). In addition, following the Hofstede and Gray 's framework would put Japan under the conservatism or masculinity cultural classification (Choi et al., 1992). However, it is widely known that Japan 's accounting system differs significantly from other national systems;



Bibliography: 1. Lawrence, S. 1996, International Accounting, 1st ed., London, International Thomson Business Press. 2. Nobes, C. and Parker, R. 2004, Comparative International Accounting, 8th ed., New Jersey, FT Prentice Hall. 3. Frederick, D. S. C. and Mueller, G. G., 1992, International Accounting, 2nd ed., New Jersey, Prentice Hall. 4. Frederick, D. S. C., Frost, C. A. and Meek, G. K., 1999, International Accounting 3rd ed., New Jersey, Prentice Hall. 5. Haller, A. and Raffournier, B., 2003, International Accounting, 2nd ed., London, International Thomson Business Press. 6. Japanese Institute of Certified Public Accountants, 2006, ‘History of Accounting and Auditing System in Japan ', online, date accessed 18th February 2006. Available from: http://www.jicpa.or.jp/n_eng/e-history.html/

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