Nobes XXXXXXXXXXin his article titled "towards a general model of the reasons for international differences in financial reporting" classifies the financial reporting systems of various countries into...

International Financial Reporting
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INTERNATIONAL FINANCIAL REPORTING    4
International Financial Reporting
Financial reporting systems of Japan and Australia
Japan and Australia have different Accounting and financial reporting systems. The major countries followed the GAAP system. The GAAP being one of the major accounting standards was widely adopted by the countries. Different countries have different ways of reporting, some countries followed the Anglo Saxon method which included UK GAAP, IAS GAAP and US GAAP these were applicable for the countries which had a strong equity outsider whereas the countries with the weak equity outsiders were listed under Label and was followed by the Standard French, Standard German and Standard Italian. The financial reporting was classified into two classes which were class A and class B. Class A was Anglo Saxon accounting and Class B was classical European accounting. Both the countries used equity/credit split in financing. The main reason for the accounting differences is because of the external environment, culture including the institutional structures, the strength of the equity-outsider system and the class of accounting.
The Australian financial reporting was based on the conceptual framework by the rule makers of the UK, US, Australia and IASC where the prediction of the cash flows was quite spectacle.
The Japanese companies followed US GAAP for their accounting and reporting purpose particularly for both US and Japanese group.
Australia adopted the UK GAAP, the Australian market also relied on the equity market and followed the UK GAAP.
Both the countries used Class A accounting class where the accounting practice differs from the tax rule. The companies followed the percentage completion method to record long term contracts. Both the countries needs to record for the cash flow statements as well as the earnings per share disclosure. The Income statement reported by both the countries needs to record the expenses as per their function.
Some of the major differences in the financial reporting of UK GAAP and US GAAP was particularly for the sale and leaseback of properties. Under UK GAAP, the sale of property was considered as the fixed asset disposal and leaseback is considered as operating lease whereas under US GAAP which is followed by Japan recorded the financing of land and building on the balance sheet.
Under the UK GAAP which was followed by Australia, was in accordance to the Statement of standard Accounting practice No. 24 and was charged against the income of the employees while Japan followed SFAS 87 for recording the pension costs.
So the financial reporting of Japan and Australia differ in terms of the classes.
Reliance on Equity market
The reliance on the equity market is quite high in the Japanese market, in Japan, there are large number of listed companies and a large equity market capitalization but the major shares of the companies of Japan is owned by the banks and other big companies.
The financial system of the Japanese companies was based on the capital market based where the companies had more reliance on their own profits and capital. Japan had an equity based system where the most of the shares were owned by the insiders. This came under the category III.
The Australian companies usually came under the category IV, as there were more outside investors as compared to the internal investors as in the case of Japanese companies.
Public disclosure of accounting information
All the public listed companies were supposed to list their financial statements asper the IAS or the US rules. The public disclosure was very important for the companies which were listed under the category IV and also required the external audit. As the companies under this category did not have any involvement of the management and no private access to the financial information. Category IV included the companies which had important equity markets with the large numbers of the outsider shareholders.
Culture influence on Financial Reporting and Corporate Governance
Japan had equity outsider financing system. The Japanese culture has a strong culture which gives a difference in the financial reporting of the company. Culture is one of the must influential aspect which leads to the strong equity-outsider markets. Both Japan and Australia is marked with type 1 culture which has a strong equity-outsider. Japan has a high degree of cultural self-sufficiency as well as strong indigenous cultures. The corporate governance of Japan as well as Australia was insider dominant and were having the financing system under the category III. The corporate governance of both the countries also was highly influenced by the financial reporting system as well as the equity market.
Reference
Nobes, (1998), Towards a General model of the reasons for international differences in Financial Reporting, ABACUS, Vol. 34, No. 2, 1998