Press Conference by the Commissioner

(Excerpt)

February 23 , 2004

Q.

On February 20, the general meeting of the Business Accounting Council has started deliberation on applying International Accounting Standards (IAS) to Japanese companies. Please tell us the significance and the challenges of adopting IAS. Also, please describe the specific efforts by the Japanese government, to request the European Union (EU) to continue accepting Japan's generally-accepted accounting principle (GAAP) after 2005.

A.

First, I would like to comment on the significance and the challenges of adopting IAS. As you already know, the EU will adopt IAS in 2005. The challenge is how to deal with disclosures in cases where companies of EU nations want to raise funds in Japan or list their stock on Japanese stock exchanges. As IAS will be adopted by the huge EU market, we expect some Japanese companies to want to implement IAS-based disclosures. Taking these circumstances into account, we need to examine how IAS-based financial statements should be treated under the Japanese legal system. That is why the Business Accounting Council will deliberate the legal system for accepting IAS.

Considering the efforts for the continual acceptance of Japan's GAAP, as explained previously, the Financial Services Agency (FSA) regards that Japan's GAAP is equivalent to the international level. With this in mind, we will negotiate persistently to request the EU market to continue accepting Japan's GAAP, cooperating with interested parties in the private sector.