Research for Reform in Financial Reporting under the Securities and Exchange Law

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New financial instruments, which are developed by using innovative financial technologies, are affecting financial reporting. Users of financial information have requested off-balance-sheet information, including unrealized gains and losses on certain financial instruments. The existing accounting system in Japan had been built on the concept of historical cost accounting. However, recent development and improvement on accounting standards introduced mark-to-market accounting for certain financial instrutmts, and report unrealized gains and losses directly in the section of shareholders' equity. New accounting income concept, including comprehensive income, is becoming a prominent issue to be examined.The objective of this research project is to develop theory and techniques that ensure reliability of the existing historical cost accounting and benefits, including providing useful information, from faithful reporting. Especially, the researchers share the issue of reporting of financial performance, examining specific issues related to accounting for financial instruments, international harmonization of accounting standards, and information about abilities of existence as a going-concern.