Presently, the Japanese Generally Accepted Accounting Principles are recognized by the European Union. The Financial Services Agency of Japan is also working to have common regulations with the International Financial Reporting Standards. The Business Accounting Council has come up with deliberations about the treatment of consolidated financial statement based upon International Financial Reporting Standards within the purview of Japanese Security Exchange Law. This measure has been presumed as the regulatory response of Japan as it involves the treatment of IFRS based consolidated financial statement prepared by issuers of both, Japan as well as foreigners, to be listed in the Japanese market.
Japan and other Asian countries should participate more into the regulatory authorities for their own benefit. Their valuable presence in the committees would voice their needs and requirements. Presently, the Accounting Standard Board of Japan is trying to build up consensus over various financial regulatory issues among the Asian economies. Among the various regulatory issues, BASEL reforms have been very crucial for the transformation of the banking sector. It has been observed that there have been certain issues in terms of compliance of BASEL norms in Japan. The financial disorder prevalent in the last decade and the continuous postponement of resolution of non – performing loan (NPL) hindered compliance with the BASEL standards in Japan along with propagating political intervention in the economy of Japan that considerably hampered bank regulations.
Today, it is almost certain in the periphery of the financial regulations that IFRS would make way for GAAP in due course of time as it has already adopted by European Union. Japan should focus more on accounting standards of IFRS rather than that of GAAP to be in line with the