1. General
Two legal codes govern the preparation of financial statements in Japan, the Companies Act and the
FIEA.
The form and content of the financial statements required under the Companies Act are dictated by the
Ordinance for Companies Accounting. The regulations are legally binding standards of accounting
and reporting to be applied to all companies incorporated and operating in Japan.
The standards of accounting and reporting to be followed under the FIEA by companies whose debt
and equity securities are publicly traded or sold are regulated by "Regulations Concerning the
Terminology, Forms and Preparation Methods of Financial Statements," which were first promulgated
in 1963 by the Ministry of Finance.
Although there are certain differences in reporting under these two sets of regulations, over the years
they have converged following a series of revisions.