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Preparation for taking a “Principles based approach” and the role of IFRIC interpretations

Takatsugu Ochi
Assistant General Manager
Financial Resources Management Group


The benefit of taking a principles based approach is that we can make the best judgment based on a conceptual framework without being too burdened by the application of strict rules. Under a principles based approach such as US GAAP, the volume of rules is much smaller than with a rules based approach, giving us the benefit of a more flexible methodology. However, it also creates the risk of divergence. IFRIC interpretations go a long way to mitigating such divergence risk and therefore the role of IFRIC is quite an important one. Japan has to study more about IFRIC interpretations, and give its comments on them to IFIC.