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Different jurisdictions have chosen different paths to IFRS. For most jurisdictions, the ‘big bang’ approach of adoption has continued to be the best approach. Since 2011, the G20 jurisdictions of Argentina, Canada, Korea, Mexico, Russia and Saudi Arabia all fully adopt IFRS Standards. Three quarters of the G20 have now adopted IFRS Standards. The IASB´s latest research of 166 jurisdictions shows that 144 have now adopted our Standards.
Other jurisdictions, such as China and India, have achieved substantial convergence between their national accounting requirements and IFRS Standards, although some differences remain. Especially China is now very close. Many of its big companies show identical results under IFRS and Chinese GAAP.
Japan took yet another road to IFRS adoption. Japan decided to ‘let the market decide’. It also provided the rest of the world with a very interesting economic experiment. When companies are given free choice, do they stick with national GAAP or US GAAP, or do they switch to international standards. And if they do switch, do they choose pure IFRS Standards or a version of IFRS Standards modified to meet local preferences? Unlike most jurisdictions, no Japanese company was forced to use a particular set of standards.
As of today, around 200 mostly big, multinational Japanese companies have chosen to adopt full IFRS Standards, representing more than 30% of the total market capitalisation of the Tokyo Stock Exchange. In addition, some very big Japanese companies are seriously looking at adoption of IFRS Standards. Before long, 50% of the Tokyo market cap could be IFRS-denominated. The number of Japanese companies using US GAAP has been steadily shrinking and is expected to be less than 10 soon.