Initiation Speech
February 27, 2008
Mr. Akio Okuyama,
Mr. Seiichiro Asakawa
“International Standardization of Accounting Standards”
Mr. Akio Okuyama,
Certified Public Accountant
Today, there are three organizations that create consolidated accounting standards that are accepted in the capital markets of the world. The three organizations consist of the International Accounting Standards Board (IASB) in England, the Financial Accounting Standards Board (FASB) in the United States and Accounting Standard Board of Japan (ASBJ) in Japan.
Since 2005, there has been a rapid increase in the number of countries adopting the international accounting standards referred to as International Financial Reporting Standards (IFRS), created by IASB as the basic accounting standards of their home country, including the EU.
The United States, initially, took the stance of not accepting anything other than financial statements prepared under FASB standards, but in 2002 the FASB and IASB agreed on convergence and have initiated discussions.
Japan is not unaffected by this. ASBJ and IASB have been positively taking part in discussions on the convergence of accounting standards and the two boards will seek to eliminate any differences between the standards by June 2011. Thus, it is possible that international accounting standards may be standardized. However, there are two major issues.
The first issue is the accounting standards applicable to business combinations. When an acquisition is made at a price greater than the net asset value of the counterpart, “Good Will” is generated. Under the Japanese standards, “Good Will” is amortized and expensed each year. However, under the international standards, amortization is not recognized, and when a situation calls for recognition of impairment, such impairment would be recognized. These differences in the accounting procedures have a major impact on the profits for the term.
The second issue is performance reports.
Historically, under Japanese standards, profits were seen as revenues – expenses = profits. The profits posted in one fiscal period were deemed to be the net profit for the term and thereby assessed corporate performance.
On the other hand, under the international standards, “comprehensive profits” are viewed as a result of corporate performance. A market valuation of assets and liabilities is performed on a prior fiscal end and a current fiscal end. The profits that incorporate the valuation difference between the two terms would be deemed the profit. In addition to the net profits for the period, the market valuation difference from the previous fiscal end balance is included in the profit for the current period.
It must be understood and kept in mind that the international unification of corporate accounting is said to be only a matter of time, but in the process, it has a significant impact on companies’ needs.
“Reagents”
Mr. Seiichiro Asakawa,
Managing Director of Tokyo Chemical Industry Co., Ltd.
Reagents are referred to as reagent chemicals or laboratory chemicals and these definitions are strictly defined by law. Reagents are used for a wide variety of research areas from development of pharmaceuticals to the development of flat screen television sets and are essential chemicals in the laboratories of universities and companies.
Reagents that are sold in the markets are sold mostly in units of grams or milligrams. At most, there are some that are sold in large units of several litres. Even in small quantities, there are some that are strongly toxic, and some that explode with exposure to air or light. Therefore, careful handling of reagents is required.
Academics and researchers who undertake research for many hours day and night require a reagent when they come upon a new idea. In new product development, time is of the essence, and delays are not allowed.
What is demanded of suppliers of reagents is maintenance of the quality of a variety of reagents, to stock many varieties and to be able to deliver the physical goods within a few hours of receiving an order.
Furthermore, in order to respond to the demand, a great deal of expenditures and expansive storage are required, which leads to unavoidable high prices.
Like therapeutic agents to cure incurable diseases, no matter how much is spent on the development of regents, there are a limited number of users. There are many chemicals that cannot be justified simply in terms of their cost.
However, just as patients suffering from incurable diseases are waiting anxiously for new drugs, researchers also eagerly await the development of reagents that will be used as the raw materials for experimentation.
The Japan Reagent Association is calling for enrichment in the variety of new reagents by sharing the cost burden in accordance with each company’s expenses, rather than engaging in product price competition.
At times, there are abuses of reagents. For example, they may be used as materials to produce chemical weapons or may even be mixed into food products. Those handling chemical reagents need to exercise extreme caution in terms of security issues during storage and distribution.
As we deal with such products, we strongly feel the weight of our social responsibility.