Establishment of the Financial Accounting Standards Foundation
July 27, 2001
Keidanren (Japan Federation of Economic Organizations)
The Japanese Institute of Certified Public Accountants
Tokyo Stock Exchanges
Japan Securities Dealers Association
Japanese Bankers Association
The Life Insurance Association of Japan
The Marine & Fire Insurance Association of Japan, Inc.
The Japan Chamber of Commerce & Industry
The Security Analysts Association of Japan
Corporation Finance Research Institute, Japan
The aforementioned private-sector organizations, in February 2001, established a working committee to initiate the establishment of the proposed Financial Accounting Standards Foundation (FASF), a private sector organization to include the Accounting Standards Board (ASB). The ASB is a body expected to have responsibility for the development of accounting standards in Japan; the FASF is expected to assume an oversight role regarding ASB activities. The organizations named above have worked together with the working committee, and are now pleased to announce the establishment of the FASF, based on the necessary approvals of the competent authorities.
The objectives of the FASF are to promote progress of corporate finance disclosure and soundness of the capital markets in Japan by developing generally accepted accounting standards. The FASF will also contribute to the development of a high quality set of internationally accepted accounting standards.
The FASF will be managed by the Board of Directors and the Trustees. The Board of Directors will assume responsibility for fund raising, personnel affairs and general operations of the FASF. The Trustees will be responsible for the selection of Directors and Auditors and give advice on significant matters such as business plans and budgets of the FASF. The ASB is structured to independently develop accounting standards and implementation guidance. In addition, the Theme Advisory Council will be formed to consider the selection of ASB’s agenda items. For each agenda project, a Technical Sub-Committee will be set up as a working group.
With regard to funding, from the viewpoint of ensuring the independence and stability of its operations, the FASF will adopt a membership system that strongly encourages participation from a wide range of interested parties. It is expected that membership fees will cover the operating expenditures of the FASF.
The FASF will start its activities soon after its formal establishment so that the ASB can immediately start functioning as the new accounting standards setting body in Japan. The ASB will have complete responsibility for the development of accounting standards, which are essential infrastructure of the Japanese economy. The ASB will develop accounting standards and implementation guidance that appropriately reflect the business environment of Japanese companies. The ASB will also communicate with the corresponding organizations abroad and contribute to the development of global accounting standards by having a liaison relationship with the International Accounting Standards Board (IASB).