The cultural, economic and political environment have a boundless influence on the accounting practices. As it is said that accounting is formed by or adopted to its environment. The difference in the countries accounting environment has been resulted in the issue related to the application and interpretation of IFRS, as in japan, J-GAAP (Japanese generally accepted accounting principle) is followed, which reflect the difference accounting regime and accounting environment. However, the convergence process of IFRS is successful, as J-GAAP is very much similar to the IFRS. Somehow there has been some critical factor that affect the convergence process of japan. In cultural aspect there are numerous bulletins

The major issue of IFRS is a translation issue from Japanese into English. As it become one of the most important part in the procedure of endorsement. In particular, the translation of the IFRS may cause issue related to the inaccurate, time lags and mistranslation. In addition, the traditional concept of japan accounting have been defined differently in terms of English language.

Other than this japan also have the "LEGEND ISSUE". As per the current rules in japan it was mandatory for financial statements of Japanese corporations, which are written in the English to have the notation (LEGEND) like "[t]his. Has to be prepared in accordance with Japanese security exchange law but not under the any other's countries accounting standard. This antiquates accounting system of japan will create the risk of misunderstanding if the financial statement were prepared in form of IFRS.

The Japanese accounting system mainly directed by three accounting regulated laws, the corporation law, the commercial code (re-named the companies Act 2005) and security exchange law.

Above mentioned laws have diverse goals but they are integrated with each other through "principle of unity" (Tanitsusei-no-gensoku). This unique accounting regulation is considered as the "triangular legal system" which plays two major roles in Japanese accounting. First- decision useful information for the investors, second - provide various reconcile interests among the stakeholders. As the IFRS will not assist in presenting these existing laws so there will be ambiguity in the procedure, which lead Japanese government to amendment its law and regulation. Because this triangular legal system is an heard of Japanese accounting practice and this give the most reliable information for the taxation purpose, dividends and decision making.

In japan 99 percent of Japanese companies are Small-and medium-sized and privately owned. The major source of finance for this companies is credit from the banking system. After liberalization of 1980, the large firm preferred market-financing but the SMEs in japan still depended on the bank debt. The predominance of retained profit and bank credit is source of finance. As this financial system, in single word is considered as "insider control" system. In this system the Japanese government does not make solid pressure to publish detailed financial information. Only the "main bank" in Japanese accounting system monitors the all-lending information of the companies. As this information will not be mandatory to disclosed by the financial systembecause the external pressure of Japanese corporate government is relatively weak. As this led to reduce in transparency in accounting system of the country. In other word to change the traditional disclosure process is become a major issue for the Japanese government.

The one of the reasons japan does not opted for IFRS adoption is the Japanese accounting system follow the traditional accounting practice which are typically a tax drive, code base, secrecy oriented as well as it is a practice to follow the practical rules. As in japan companies have tendencies to mimic or in other words a tendences to follow whatever others are doing. This creates strong power enforcement of GAAP in japan.

In this section, you should be able to discuss the various/critical factors that governs the Japanese

economy and the corporate entities in terms of financial reporting and business practices etc. Some

example (e.g., traditional, rudimental, modern, and one that may have been influenced by some

events/agreements- political, trade, taxation, economic, etc.) that shows a stark or clear difference

in the trend with the existing international regime of financial reporting. Your discussion should

what are the chiefly focus on the available literature on IFRS convergence in Japan and other countries. In order

that your discussion is coherent enough, you should be able to reflect/identify certain theories in

support/against the IFRS convergence. You can show this by relevant examples demonstrating to

some extent, a deeper and or providing some useful "insight(s)" about Japan's financial reporting

system for your reader.