Nippon Keidanren sent a comment letter on January 30, 2004 to the Financial Services Authority of United Kingdom ("UK FSA") regarding its proposal that would require overseas issuers listed in the UK to report their financials in either IAS (International Accounting Standards) or US GAAP. Twenty five Japanese companies that have keen interest in capital markets in UK and Europe support the comment letter.
If financials must be reported in either IAS or US GAAP, listed foreign companies will need to do so in both local GAAP and in IAS or US GAAP. The burden of doing so would, in the final analysis, be borne by shareholders and investors to their disadvantage. This additional burden would not only distort optimum capital allocation on a global and would have negative consequences for the world economy but also would impede the opportunities of UK investors in investing in the world's major corporations and would risk damaging the reputation of the open UK's capital market.
Especially, in the case of Japanese standards, the Japanese corporate accounting and auditing regime have been developed under the accounting reform in the late 1990s and 2000s. The quality of Japanese standards is in no way less rigorous than IAS/ISAs (International Standards on Auditing) or US standards and is equivalent to these of them. In addiction, financial activities of Japanese issuers in the UK are significant and benefit UK capital markets and investors. Therefore, Japanese listed companies should be allowed to use Japanese standards.