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Auditors asked to treat regional banks differently.

TOKYO, Aug. 26 Kyodo

The Japanese Institute of Certified Public Accountants (JICPA) asked auditing firms in a meeting Tuesday to treat regional banks differently from major banks when assessing deferred tax assets or future tax credits.

''The government policy toward regional banks on bad debt problems is different from that for major banks. So (accounting) treatment must be different as well,'' JICPA President Akio Okuyama told reporters after the meeting.

Okuyama's comment came amid growing criticism that banks are padding their capital by calculating deferred tax assets as capital to an excessive degree.

The criticism emerged after Resona Bank, the core unit of Resona Holdings Inc., said in May that its capital adequacy ratio had plunged to 2.07% as of March 31, below the 4% required for banks operating domestically, after its auditors refused to recognize some of the deferred tax assets counted by the bank as capital.

Okuyama said regional banks should be treated differently from major banks because their borrowers are mostly small and midsize companies and thus disclose less corporate financial data.
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Publication:Japan Weekly Monitor
Date:Sep 2, 2003
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