2011 IFRS Conference in Taiwan The Current Situation

2011 IFRS Conference in Taiwan The Current Situation of IFRS Foundation and Activities in Japan Feb 23, 2011 Trustee, IFRS Foundation Chairman, International Affairs Committee, The IFRS Council of Japan Special Adviser, Sumitomo Corporation Noriaki Shimazaki

1. Organization of IFRS Foundation Monitoring Board of public capital market authorities appoints, monitors IFRS Foundation Trustees 22 person appoint report to (Governance) inform IFRS Advisory Council 40 person provides strategic advice oversee, review effectiveness, appoint and finance informs Standard-setting 16 person IASB (IFRSs/IFRS for SMEs) IFRS Interpretations Committee 14 person 　　　SME (IFRICs) Implementation Group IFRS Foundation support operations Education Initiative, IFRS Taxonomy (XBRL), Content Services Source：’Who we are and what we do’ (IASB/IFRSF) 1

　　2. Personnel Organization of IFRS Foundation Number of Person Asia Oceania North America Europe Others Vacancy IFRS Foundation 22 7 Japan 2, China, Australia, India Hong Kong, South Korea 6 3 2 Brazil, South Africa 4 IASB 16 4 Japan, China, Australia, India 4 5 2 Brazil, South Africa 1 IFRS Interpretations Committee 14 4 Japan, China, Australia, New Zealand 4 6 － －

　3. Current activities of IFRS Foundation 1．Current issues related to Running costs and Funding 　　Shortage of funds, Free rider 　　⇒Contribution widely from all countries which implemented IFRS 2．Change of IASB Chair 　　Expiry date of Sir David Tweedie is June, 2011 　　⇒Twin Head: Mr. Hans Hoogervorst (Chair) and Mr. Ian Mackintosh (Vice-chair)　　 3．Change of Trustees Chair 　　From Mr. Gerrit Zalm to Mr. Tommaso Padoa-Schioppa 　　⇒Sudden passing away of Mr. Schioppa 4．Strategic Review 　　 Comprehensive review of the IFRS Foundation’s strategy for next decade 　　⇒Four areas of Principle: Mission, Governance, Process and Financing 5．Establishment of satellite office 　　○ New challenge for London-based IASB is responding to the global needs on a timely fashion 　　○The major countries of Asia-Oceania region are moving to mandatory use or convergence of IFRS through 2011 to 2012 　　 3

　4. Activities for smooth application of IFRS in Japan 1．The IFRS Council of Japan 　To focus on helping accurate understanding of the proposed standards to share 　　 　　correct understandings, and finally to form a shared perception as the basis for 　　formulation of the opinion that represents Japan as a whole 　　⇒How to promote Japanese presence at international forefront 4

　4. Activities for smooth application of IFRS in Japan 2．IFRS　Implementation Task Force 　　【Establishment】　October, 2009 (We have 13 times of meeting) 　　【Objectives】　a. To support smooth implementation of IFRS for companies that is to apply IFRS on a voluntary basis 　　　 b. To accumulate and organize the practical issues raised in application of IFRS, and share respective experiences c. To minimize unnecessary costs for IFRS implementation 　　　 　 　　【Organizers】　Japan Business Federation and JICPA 　　【Members】　21 companies belonged to Japan Business Federation Big 4 auditing firms (KPMG, DTT, E&Y and PWC) 　　 Observer: FSA, ASBJ and Tokyo Stock Exchange 　　【Points under discussion】　 ・First-time adoption ・Revenue Recognition ・Tangible Assets 　　　 ・Intangible Assets 　　　 ・Financial Instruments 　　　 ・Consolidation 　　　 ・Post-retirement Benefit Trust 5

　5. Feedback of discussion in IFRS implementation T/F 1．Feedback of discussion ⇒To serve as a bridge between the principles of IFRS and accounting practice ○To prepare practical examples based on the discussions of the Task Force and distribute the examples to member companies of Japan Business Federation ○To distribute the presentation materials from auditors as Appendix ○Practical examples are prepared and published by Japan Business Federation ○To hold a seminar for member companies of Japan Business Federation (1, 300 companies) based on the materials ○Persons in charge of Task Force member companies serve as lecturers of the seminar ○FSA, JICPA and ASBJ participate in the seminar as observers 2．Examples of Q&A (First-time adoption) Q 1．How to treat first-time adoption in Japanese Headquarters in case that subsidiaries in Europe had already applied first-time adoption in 2005? Q 2．In case that the retroactive application of IFRS should be applied, until when we trace and re-calculate? Q 3．Are there any special treatments (alleviations) besides exemption of IFRS 1? Q 4．The meaning of “Foreign currency transaction adjustments could be reset”? Q 5．When the announcement of voluntary application of IFRS should be done to the market? Q 6．How to treat the accounting system when we adopt IFRS first time? (Company should prepare financial statements by current accounting standards and IFRS) 6

6. Strengthening relationship in Asia-Oceania and expressing views to IASB　 1．Importance of Asia-Oceania region 　　○8 out of G 20 (Share: 40%) are Asia-Oceania countries ○1/3 of financial contribution to IFRS Foundation comes from this region 　　○Asia-Oceania is the engine of recent global economic growth 　　⇒To express consolidated views in the region to IASB, and to aim setting accounting standards reflecting views of this region as much as possible 　　⇒To support activities of IASB as 3 rd force besides USA and Europe 2. Relationship in Asia-Oceania 　1) Japan-Australia: Learning from Australia’s model 　　　○Australia mission (Sep, 2009) (JBF, JICPA and FASF) Building relationship with accounting professions, industries and governments 　　　○ Seminar “Learning IFRS adoption - a case in Australia-” held on 8 Feb, 2011 in Tokyo 　2) Japan-India：Sharing experiences with India that in the same stage 　　 ○India mission (Feb and Apr. 2010) (JBF, JICPA, FASF, TSE and FSA) 　　 ○Formalizing the India-Japan IFRS Dialogue by signing of MOU 　　　 　　2010( in Tokyo): 26 July –Dialogue/ 27 July - Forum ⇒ Establishment bilateral relationship with Asia-Oceania countries is expected to be 　 　　integrated to multi-national relationship　 3. Arrangements for strengthening relationship in the Asia-Oceania region 　1）AOSSG（Asia-Oceania Standard Setters Group) meeting 　　　 （2 nd AOSSG meeting held on Sep, 2010 in Tokyo, 24 countries） 　 2）Establishing satellite office of IFRS Foundation in Asia-Oceania region 　　 7