Support for Uniform Accounting Periods

The advantages of adopting uniform accounting periods are found in both in managerial accounting and in investor relations.
Firstly, from the managerial accounting point-of-view, uniform accounting periods allow management of the group as a whole using information from the same period and assists in making prompt business decisions. As a result, businesses are able to monitor their performance on a timely basis and to appropriately respond when a problem occurs. Additionally, by using more accurate accounting numbers, we are able to make appropriate consolidation and performance forecasts, which lead to standardization of budget compilation periods and performance management.

Secondly, uniform accounting periods allow businesses to be able to improve the quality of financial information provided to investors. Since many overseas companies have adopted uniform accounting periods for the group as a whole, it has become easy for stakeholders such as analysts and investors to compare their results with other overseas companies. Accordingly, the convenience in terms of investor relations has improved. In addition, if uniform accounting periods are not adopted, it is extremely difficult to compare and analyze the impact of rapid external environmental changes to the consolidated financial results. However, once adopted, uniform accounting periods will assist in providing appropriate explanations about the business results to investors.

Adopting uniform accounting periods will make closing periods shorter for those companies that had previously used different cut-off periods. Thus, it will require those companies to settle accounts earlier to submit consolidated data by the due date. If there are companies to be included in the consolidation that were previously excluded from the reporting dead line of consolidation package, the systems and communication abilities of these companies will need to be reviewed from the view point of accuracy and efficiency for them to be able to create and submit the consolidated packages by the required deadline.

We will make efforts to sort the former closing tasks, to establish new accounting structures to settle accounts earlier and to provide best practice systems and procedures based on our past experience.

Expected Issues Arising from Settling Accounts Earlier

When accelerating the financial closing process, the following issues would be expected. We frequently communicate with clients regarding these issues and respond to any concerns they have in a timely manner.
Issues Contents
Importance of accelerating the financial closing process If different cut-off periods are applied, overseas subsidiaries generally have enough time to prepare financial statements. However, where uniform accounting periods are in place subsidiaries will be required to dramatically shorten their closing schedules. We set a goal of 10 to 15 days from the end of the period for companies to submit consolidated packages.
Management audit schedules for overseas subsidiaries It is important to work with local auditors to manage audit schedules and it requires those overseas subsidiaries to set audit schedules in line with the reporting dates for submission of consolidated reporting packages.
Procedures of changing accounting periods for each subsidiary It is necessary for overseas subsidiaries to work with local auditors and experts to manage the procedures for changing accounting periods in each country in regards to the necessary procedures under the local systems.
Making necessary adjustments and obtaining approvals from minority shareholders in overseas subsidiaries If there are minority shareholders of overseas subsidiaries, explanation and approvals must be sought prior to making the necessary adjustments. Without obtaining the approval, the provisional settlement of accounts might not be possible.

Approaches toward Uniform Accounting Periods and Settling Accounts Earlier

It is necessary to prepare both the parents and subsidiaries' financial statements as a group on the same date, as well as to plan to take any necessary action and to systematically proceed with the projects as a group.
It is often difficult for subsidiaries' accounting departments to stay motivated enough to work individually on accelerating the financial closing process in a positive manner, and there is often not enough knowledge and know-how. It is best to proceed with projects for accelerating the financial closing process after obtaining company-wide support. That is, support not only from subsidiaries' accounting departments but also from sales / purchasing departments, and to know how to put the project into practice. It is also important to ensure that a number of trials (trial closings) are performed in order to adequately identify and rectify any unexpected problems. For these reasons, it is essential for parent companies to monitor and control the process of unifying accounting periods throughout the project.
Based on the above, JBA provides services with a view to preparing comprehensive action plans, taking the necessary action, performing practice runs and following up after implementation.


Main Points for Establishing Basic Policies

Example) The parent company settles accounts in March while overseas subsidiaries settle accounts in December.
Points Contents
Examples of unifying accounting periods 1) Unifying the accounting periods for both parent and subsidiaries to the end of March.
2) Unifying the accounting period for both parent and overseas subsidiaries to the end of December.
Methods of unifying accounting periods In case of 1) above:
Performing each of the following for subsidiaries whose accounting periods end on December 31:
* Changing the accounting periods of subsidiaries to the parents company's accounting period; or * Preparing financial statements for both statutory purposes and provisional settlements of accounts (consolidation packages).
In case of 2) above:
Changing the accounting period of the parent company to the subsidiaries' accounting period (However, in this case it would be necessary to settle accounts earlier on a consolidation basis to maintain the current schedule for closing announcements on consolidation).
Project schedule Determining the project schedule taking into consideration the size of each subsidiary whose accounting periods need to be modified, and the set-up of the accounting departments. Trial periods for accelerating the financial closing process would also need to be considered.
Schedules for closing announcements on consolidation Determining the timing of consolidation package collection from subsidiaries based on the scheduled announcement day.

Examples of Our Projects

In order to support expanding globally businesses and to improve management and group governance on a consolidated basis, it is necessary to standardize infrastructure for business management. Arranging timings, rules and tools is the foundation of a successful standardization. Specifically, it is necessary to unify and standardize three key areas: accounting periods, accounting policies and accounting systems. Since these areas are connected, it is important to be aware of the effect of the unification of accounting periods. We fully support clients with our extensive knowledge and in-depth experience.

Examples of a phase (Prospective IFRS introduction is assumed.)
Examples of a phase

Our Service

IFRS国際財務報告基準_S
ナレッジ&ニュース_S
採用情報_S
お問い合わせ_S
Back to
top of page