The objective of this paper is to discuss issues in institutionalizing the General Accounting
path for their SME accounting.
1. The institutionalization of SME accounting starts by accepting that SMEs' attributes differ
from those of large companies. Their different attributes lead to different accounting
practices, and different accounting practices need different accounting standards.
2. To instill the General Standard at the institutional level, it is necessary to build a structure
of cooperation that unifies administrative agencies (SMEA, FSA), the business community
(SME-related organizations and financial institutions), accounting professionals (CPTAs and
CPAs), and the education community (accounting scholars and educators). Collaboration
among accounting professionals and financial institutions is particularly important in putting
the General Standard in place.
3. The most crucial institutional challenge to the General Standard is how to ensure reliability
of financial statements. Although it is hoped that current systems －i.e., the accounting
advisor system and the document attachment system－ will become more prevalent, the
possibility of an audit system intended for SMEs should be explored as a future (legal or
practice-oriented) system.
4. Dissemination and promotion of the General Standard are key to improving the quality of
SME accounting. To this end, it is necessary to muster the collective strength of everyone
involved with SMEs (administrative agencies, SME organizations, financial institutions,
accounting professionals) and to provide SMEs guidance, education, and awareness of the
professionals. Through these efforts, the General Standard can become not only the generally
accepted standard in Japan but also be a beacon for other countries trying to find a clear
path for their SME accounting.? Key Words: Institutional Establishment, Dichotomization of Accounting System, Ensuring
Reliability of Financial Statements, Accounting Advisor, Document Attachment System, Generally Accepted Standard, Globally Accepted Standard
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The objective of this paper is to discuss issues in institutionalizing the General Accounting
path for their SME accounting.
1. The institutionalization of SME accounting starts by accepting that SMEs' attributes differ
from those of large companies. Their different attributes lead to different accounting
practices, and different accounting practices need different accounting standards.
2. To instill the General Standard at the institutional level, it is necessary to build a structure
of cooperation that unifies administrative agencies (SMEA, FSA), the business community
(SME-related organizations and financial institutions), accounting professionals (CPTAs and
CPAs), and the education community (accounting scholars and educators). Collaboration
among accounting professionals and financial institutions is particularly important in putting
the General Standard in place.
3. The most crucial institutional challenge to the General Standard is how to ensure reliability
of financial statements. Although it is hoped that current systems －i.e., the accounting
advisor system and the document attachment system－ will become more prevalent, the
possibility of an audit system intended for SMEs should be explored as a future (legal or
practice-oriented) system.
4. Dissemination and promotion of the General Standard are key to improving the quality of
SME accounting. To this end, it is necessary to muster the collective strength of everyone
involved with SMEs (administrative agencies, SME organizations, financial institutions,
accounting professionals) and to provide SMEs guidance, education, and awareness of the
professionals. Through these efforts, the General Standard can become not only the generally
accepted standard in Japan but also be a beacon for other countries trying to find a clear
path for their SME accounting.?
Key Words: Institutional Establishment, Dichotomization of Accounting System, Ensuring
Reliability of Financial Statements, Accounting Advisor, Document Attachment
System, Generally Accepted Standard, Globally Accepted Standard