Japanese subsidiaries of corporate groups listed overseas are required by their parent companies to report their own financial figures in order to prepare consolidated financial statements for the group. Specialized knowledge and workload are required to convert the figures into IFRS or other accounting standards of the parent company’s country, and to prepare details of each financial details (so-called consolidated package), and communication with the overseas parent company is also very important. We provide total support for these.

Adjustments from Japanese GAAP to IFRS

There are differences between Japanese accounting standards and IFRS. When a Japanese subsidiary needs to report financial information to its parent company, there are two main ways to do so.

[Method ①]

The first method is to keep the local accounting books in accordance with Japanese local standards as before, and adjust and reclassify to IFRS outside the accounting books for the purpose of consolidated reporting.

The advantage of this method is that the process from local bookkeeping to tax reporting remains unchanged, and can be handled with the current system and local staff. The disadvantage is that adjustments will be required every month for consolidated reporting.

[Method ②]

The second method is to record the local accounting books directly in accordance with IFRS. The advantage of this method is that the monthly consolidated reporting work is simplified, and from the parent company’s perspective, it is easy to check because the journal ledger are smoothly connected to the monthly financial statements. The disadvantage is that it is difficult to secure local staff who can record monthly work based on IFRS, and tax adjustments become complicated.

Both methods have their pros and cons. You will need to determine the best method, taking into consideration requests from your parent company and your company’s resources.

We will provide advice and negotiate with the parent company from this initial design stage onwards. Please feel free to contact us for a consultation.