4/12/2008: Mark-to-market accounting in Japan

This translation from Japan's Nikkei sheds light on international aspects of mark-to-market accounting and the credit crisis (all figures in JPY).

The U.S. subprime loan problem may affect the auditing of Japanese companies which closed books in March 2008. Amid the confusion of the securitization market, not just banks but also business companies like Marubeni are reporting appraisal losses of securitized products they hold. While there is talk about the need to review market-value accounting, the Japanese Institute of Certified Public Accountants (JICPA) has urged its members to be strict in evaluating securitized products in term-end auditing.

Marubeni is the domestic business company that suffered the largest loss from securitized products. It will post an appraisal loss of \17.6 billion on financial assets worth about \20 billion in book value including CDO and ABS held by its British fund management subsidiary.

The JICPA on March 26 issued guidelines for evaluation of securitized products to audit corporations, intending it as a warning to both sides that accountants will be strict with companies they audit. (Nikkei P14 4/12)