Japan to request EU accept its accounting rules

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Japanese companies could be left out of capital markets in the European Union if accounting standards in used in Japan are not brought into compliance with EU accounting rules before a deadline set by Brussels. Japans Financial Services Agency says that while it has been working toward compliance, but that Brussels has asked for more changes that cannot be met by the January 2009 deadline for compliance by foreign companies. EU companies have been bound by the International Financial Reporting Standards (IFRS) since 2005.Japan has until July 2008 to convince the EU that its own Generally Accepted Accounting Principles (GAAP) meets EU standards. If it cannot do so and must make the changes asked for by Brussels, according to Japanese officials, it will not be able to meet the 2009 deadline because it says it will take up to three or four years to make some of the rule alterations. Besides the time element involved, Japan says that it would cost too much to conform to IFRS.If an agreement on the issue cannot be made, a number of EU-listed Japanese companies, including Sony (TYO: 6758; NYSE: SNE), Toyota (TYO: 7203.T; NYSE: TM; LSE: TYT), and Canon (TYO: 7751; NYSE: CAJ), could find themselves forced to de-list in Europe, crippling their ability to raise capital there. As it is, the FSA says that listings of Japanese companies in Europe have fallen from 80 in 2002 to less than 30 currently.