International Organization of Securities Commissions (IOSCO) declared its support in 2000 by the accounting standards which were set and implemented by International Financial Reporting Interpretations Committee (IASB).
In the year 2005, all the consolidated accountings of public companies in EU nations were declared in compliance with IFRS standards. On the other hand, During a joint meeting held between FASB and IASB in the year 2002 in U.S, [The Norwalk Agreement] was signed aiming at convergence between U.S. standards and International Financial Reporting Standards Further, in February, 2006, a memorandum was signed regarding the clarification of concrete convergence items and completion of hort term convergence items till the end of 2008
Further, in November, 2008, U.S. passed a formal declaration for the change in the direction from convergence of IFRS to adoption

In Japan, dissolution of differences withi nternational financial reporting standards till June, 2011was declared in [Tokyo Agreement] held in August, 2007.
Financial Services Agency, based on this, decides about the forced application of IFRS in reference to the road map of U.S.
At present the forced application in Japan will be for the years 2015 and 2016.
Based on this, transition status to IFRS for each nation will be as specified below.

As for IFRS transition, it becomes mandatory to consider the relation between IFRS and domestic accounting standards.
At present, discussions are going on with [Consolidation preference]. [Consolidation preference] represents the application for consolidated financial statements and non-application for simple and individual financial statements.
As for the basis of this concept, since application of IFRS in simple accounting requires adjustment of basic systems such as company laws, tax laws, simple accounting catches up with IFRS
Performing consolidated accounting as per IFRS standards means the performance of simple accounting too on the basis of IFRS standards. Hence, it is likely that accounts settlement is done on both IFRS standards and Japanese accounting standards for simple accounting till simple accounting is recognized by IFRS and arrangements need to be made for the environment for company laws and tax laws.

When we assume that March, 2015 as forced application year if we go by the provisions as per IFRS Rule No.1 [Initial Application], IFRS transition date will be 2 years prior to forced application year, i.e., 1st, April, 2013.
With this date, it requires the preparation of the first financial statement [IFRS initial balance sheet] based on IFRS.
Accordingly, basic arrangements for IFRS compliance needs to be completed on 1st April 2012 i.e. before 1 year.
In addition to this, [IFRS initial balance sheet], IFRS based financial statement for March 2014 and IFRS based financial statement for March, 2015 need to be disclosed

Scope of consolidated accounting
Since there is no provision for exception for consolidation, all the subsidiary companies will become the objects for consolidation if [Substantial controlling powere] exists.

Global ERP expansion
When IFRS is applicable and [Substantial controlling power] exists, all the subsidiary companies become the objects for consolidation. Accordingly, it becomes necessary to complete the expansion of global ERP system as IT system in order to provide business process as the infra structure for IFRS application.
Since there is a higher possibility for changes in the framework of existing internal control based on IFRS application, re-building of internal control becomes mandatory in such cases with global ERP system as the infrastructure.

Segment disclosure and information system
Since it requires management approach based segment disclosure , it becomes necessary to define the segment and build the system to provide system accounting information and management accounting information Further, this system should drill down the differences in the system accounting and management accounting information and provide the information that can explain these differences.

Accounts settlement date for subsidiary companies
As a rule, the accounts settlement for the parent company and subsidiary company should be the same. Permissible limit should be within 3 months. Even in such cases, it is necessary to prepare consolidated settlement sheets while covering the impact of this deviation.

Segment disclosure and information system
It requires segment disclosure in line with the methods known as [Management Approach]. As for [Management Approach], it becomes necessary to go for segment disclosure as per the documents (Business administration documents/Management accounting documents) based on segment classification. In such cases, management accounting information and system accounting information need not be matched but Follow up for the differences. should be made possible.
this case, BI tool which is meant for the creation of business administration documents need to have a drill down function to enable the follow up for the differences.

Function currency
Function currency refers to the currency used in main economic environment in which the enterprise performs its activities and accounting process needs to be performed with function currency. For example, in case of subsidiary companies having a major part of transactions with parent company in any country, the accounting process needs to be performed in Japanese yen.

About internal control
Internal control procedure based on the current J-SOX need to be re-built in conformity with the new accounting standards.

Client's profile
Company B is automotive components manufacturer expanding its business at global level having its Headquarters in Japan.
As it is the listed company of the first section of the Tokyo Stock Exchange, it requires arrangements for IFRS application.

Client's needs
Before replacing futuristic production control system, it requires introduction of accounting system which can be used even after deciding on IFRS
The target companies for introduction are 4 domestic subsidiaries and 1 subsidiary in Thailand.

Background of introduction
At present, they are using SAP ERP but its support is going to be disconnected shortly. Hence they salected SAP Business One being the product of the same SAP corporation which supports IFRS and is higher in cost performance.

Details of introduction
LBC ensured auto linkng of sales, purchases, inventory, production control etc. of SAP ERP to SAP Business One accounting module. This SAP ERP will be replaced in future by a separate production management system.
During the requirements definition phase, we proceeded with the study concentrating on IFRS support.


The main actions by the system are as follows.
1. Acquire backup for database on monthly basis in case of IFRS supported journal entries and input the required IFRS supported adjusting journal entries.
2. Sales related inspection standards should be supported by any of these like entry of adjusting journal entries on monthly basis or by posting the accounts receivable after setting the probable date of goods receipt or by posting accounts receivable after the entry of inspection information.
3. As for function currency, domestic currency is set to yen and system currency is set to the currency used on-site.


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