Accounting, taxation, valuation and assurance
Tokyo Kyodo Accounting Office offers a one-stop, highly specialized consulting service
ranging from product and scheme designed to accounting and taxation support for special purpose vehicle management and administration.
Tokyo Kyodo Accounting Office offers a one-stop, highly specialized consulting service ranging from product and scheme designed to accounting and taxation support for special purpose vehicle management and administration.
Structured finance has been a Tokyo Kyodo Accounting Office core business since its establishment and is a service that has earned the support of a wide range of clients consisting chiefly of financial institutions, asset managers and corporate sponsors who engage in structured finance development and arrangement.
Structured finance is a sophisticated finance scheme for creating financial instruments for each project with new arrangements and mediating financing between fund raisers and fund suppliers. Tokyo Kyodo Accounting Office has been involved in a large number of projects, mainly in asset financing for real estate, etc.
Team members who are experts in accounting and taxation and possessing outstanding consulting capabilities work in coordination with sections specializing in vehicle management, offering for example advice in accounting and taxation on the product design stage, advice related to vehicle management and administration, evaluation services in agreed-upon procedures (AUP), liabilities and other high-quality services covering all processes in response to client needs. For these we have earned the support of a wide range of clients, chiefly among financial institutions, asset managers and corporate sponsors who are engaged in developing and arranging structured finance.
We offer consulting with attention to important points requiring attention in accounting and taxation necessary in financing scheme administration and management and we also do accounting and taxation processing.
We offer consulting with attention to important points requiring attention in accounting and taxation necessary in financing scheme administration and management and we also do accounting and taxation processing.
Consolidated assessment of the vehicle
■Assessment of SPC subsidiary based on controlling power (power and return) standards
■Assessment of application of special exemptions on SPCs
■Assessment of the need of consolidating trust or investment partnerships (voluntary partnership or sleeping partnership), etc.
■Handling of important notes regarding special purpose companies targeted for disclosure
Off-balance-sheet assessment in property securitization
■Approaches to off-balance-sheet decisions based on the 5% rule
〇Confirmation of continued involvement based on various contracts, etc.
〇Assessment of the validity of the transfer price based on the real estate appraisal report
〇Assessment of the validity of leases based on the real estate appraisal report, etc.
〇Assessment of the validity of property peculiarities based on the real estate appraisal report, etc.
〇Lease decision (see below)
〇Assessment of whether the SPC classifies as a subsidiary of the assignor
〇Handling when there are multiple assignors
〇Assessment of validity of off-balance-sheet financing in view of the above
■Assessment of whether or not to continue off-balance-sheet financing when refinancing
■Accounting and taxation in on-balance-sheet (financing)
〇On-balance-sheet accounting and taxable income calculation for corporate tax
〇Consumption tax handling for on-balance-sheet financing
Lease assessment services
■Approach to lease assessment and actual calculation
〇Summary of assessment methods for accounting and taxation and the differences
〇Lease assessment regarding property lease contracts
〇Assessment based on service life standards
〇Assessment of the period of irrevocability based on the terms of contract
-Assessment of the economic life based on appraisal report, engineering report, etc.
〇Assessment based on market value standards
-Calculation of total leasing fees
-Calculation of leasing fees for structures in property lease combining land and structure
-Calculation of maintenance and management fees based on the appraisal report, etc.
-Calculation of discount rate in accounting
-Calculation of interest on borrowings for taxation (assessment of capital and interest rate)
〇Assessment of lease using Excel and so on with attention to the matters mentioned above
■ Accounting and taxation processing at the time of finance lease transaction
Decision on off-balance-sheet financing for financial assets, etc., and accounting
■Decision on off-balance-sheet financing for financial claims, etc.
〇Confirmation of whether or not to execute legal conservation in response to legal opinion, etc.
〇Confirmation of whether the assignee can receive the benefits
〇Confirmation of whether or not there are rights and obligations regarding repurchase
■Accounting method in case of off-balance-sheet financing
〇Calculation of sale loss/profit
-Handling of cash reserves
-Assessment of borrowings targeted for transfer end of subordinated equity interest for calculation of sale loss or profit
-Differences in handling between individual financial statements and consolidated financial statements
〇Accounting and indication method in case of ownership of subordinated equity interest, etc., by the assignor
■Handling of new securitization scheme (self-settled trust, future assignment of receivables, trust for dissolution of cross shareholdings, etc.)
■Handling of loan participation
■Handling of debt assumption
Matters related to taxation of securitization of financial claims
■Matters related to withholding tax; decision on withholding tax levy pertaining to interests on securitized corporate bonds, loans, etc.,
〇Action on the scheme and on the terms of contract to avoid withholding tax levy
〇Action on the scheme and on the terms of contract in case of withholding tax levy
■Matters related to consumption tax; determination of entities on which consumption tax is levied, e.g., loan commission, commission on early repayment charge, etc.
〇Action on scheme to prevent investor payment of consumption tax
■Determination of impact on requirements to include deductible expenses for the SPC that is the issuing body (borrower), in case securitization takes place for a specific corporate bond or specific special purpose alone
〇Action on the scheme and on the terms of contract that does not impact the requirements for deductible expenses on dividends for the SPC
Accounting and taxation pertaining to derivatives
■Determination on whether derivative trade applies
■Determination of applicability for hedge accounting
〇Determination of eligibility for hedge accounting
〇Determination of applicability of forecasted trade for hedge accounting
〇Determination of applicability of special exception handling of interest swaps
■Timing for recognition of losses/profits in application of hedge accounting
■Handling when asset is acquired with derivatives (accounting/corporate tax/income tax)
Compound instrument (with or without capital increase) accounting and taxation
■Determination of integrated processing/sectioned processing
■Accounting and taxation for corporate investors
■Taxation-related matters for private investors
■Accounting and taxation for the issuing entity
Trust accounting
■Accounting for the assignor
〇At time of trust setup
〇At sale of beneficiary rights
〇Handling in case of trust loan
〇Handling of self-settled trust
■ Accounting for the beneficiary
〇Financial trust ownership type and accounting
〇Indication and accounting of preferred beneficiary rights
■Accounting and trust practice accounting for the assignee and relationship with corporate accounting
〇Amount entered as trust asset and trust capital
〇Review of accounting rules and update counseling
Trust taxation
■Determination of trust category
（action on the scheme and on the terms of contract to prevent classification as corporate taxation trust）
■Individual points of argument in securitization with preferential/subordinated structure trust
〇Corporate tax handling
-Acquisition of income for preferred beneficiary and subordinated beneficiary
-Handling of depreciation expenses if depreciable assets are found in the trust property
〇Handling of (withholding) income tax
-Proposal of action on the scheme and on the terms of contract to prevent tax levy at source for revenues of the trust property
-Handling in case of partial tax deduction at source, such as interest on trust property, due to some of the beneficiaries holding taxation status at source and action on the terms of contract
■Accounting and taxation of other new schemes making use of the trust
〇Handling of Japanese ESOP (employee stock ownership plan) (including calculation of guarantee fees)
〇Handling of trust for dissolving cross shareholdings
〇Handling of self-settled trusts
〇Handling of purpose trusts
〇Handling of security interest trusts
〇Handling of special-purpose trusts
Taxation relationships of partnerships, such as sleeping partnership
■Accounting and taxation for corporate investors
■Taxation-related matters for private investors
■Matters related to taxation at source for sleeping partner dividends
■Action on inconsistency in accounting and taxation due to impairment processing, etc.
■Handling of bankruptcy of investors in funds or sleeping partnerships
Matters related to taxation of SPCs
■Determination regarding satisfaction of requirements to include dividend payout in deductible expenses
■Study into the application of withholding tax exemption for properties managed by the SPCs
■Determination on application of exemption on reduction of taxes on transactions (registration and license tax and property acquisition tax)
■Action on securitization plan to gain tax system benefits and on various contracts
Examination of market value under tax law (determination of risk of being identified as donation)
■Determination of the validity of the transfer price and of donation risk
■Determination of the validity of handling charges, interests, guarantee fees, etc. and of donation risk
■Matters related to taxation in case of identification as donation and taxation on gain on donation received
International Financial Reporting Standards & US Generally Accepted Accounting Principles
■Handling under IFRS and the US GAAP (differences versus Japanese standards)
〇Determination of financial consolidation
〇Determination of off-balance-sheet financing for real estate
〇Determination on leases
〇Determination of off-balance-sheet financing for financial instruments
〇Financial instruments accounting (market value assessment, etc.)
〇Others
■Reclassification of Japanese standard financial statements to IFRS
Matters related to international taxation
■International tax counseling related to structured finance
〇Determination of PE risk
〇Organization of matters related to taxation at source
■Withholding tax exemption for interests on private overseas bonds and transfer bonds, etc.
■Matters related to withholding tax on domestic asset investments by foreign corporate entities, etc.
■Handling of withholding tax at quarter for foreign asset management
〇Determination of applicability of foreign tax deductions
〇Determination of applicability of inadequate capital tax scheme
〇Determination of applicability of tax haven scheme
〇Handling of dividends of foreign subsidiaries
〇Matters related to tax conventions
■Counseling on scheme organization with attention to the matters described above
■Counseling on restructuring existing schemes with tax system amendment
* Regarding matters related to business companies (operating overseas/Japan), transfer price, etc., please read “International Taxation.”
Guarantee service and AUP service is provided, based on audit and verification by certified public accountants and certified public tax accountants.
AUP on receivables pool such as housing loan claims, leasing fee claims and consumer loan claims
■Inspection of individual claims
〇Calculation of the number of samples, based on the requirement standards of rating institutions, etc.
〇Extraction of samples from the population
〇Cross-checking against various contracts
〇Cross-checking against system data
〇Inspection of other matters related to AUP
■Inspection of the accuracy of the details in the financial instrument briefs
〇Confirmation of the accurate data on the claims pool (distribution of payment dates, terms of interest, etc.)
〇Inspection of data related to the financial highlights on major interested parties
■Inspection based on the claims transfer and registration system
AUP for securitization of loan claims, etc., for SPC owning real estate (CMBS)
■Inspection of information (rent roll, past revenues and expenditures, list of property profiles, etc.) pertaining to backing assets
■Inspection of data pertaining to loan claims, etc. (list of major requirements and repayment status chart)
■Inspection of the details in the financial instrument briefs (refer to above)
AUP for CDS (credit default swap) contracts, etc.
■Inspection on applicability as reason for default
■Inspection regarding satisfaction of qualifications requirements in replacement of reference claims
■Price assessment based on certain equations
Verification of accounting and taxation pertaining to business plans and cash flow projections
■Verification of the following accounting and taxation items pertaining to business plans and cash flow projections for solar power generation and other various power generation projects and securitization and investment schemes for financial claims and real estate
〇Calculation of profits and losses
〇Calculation of taxable income
〇Calculation of taxes
〇Timing for tax payment and refund
Accounting audit on vehicle and fund
Claims pool and securitization instruments are evaluated for securitization.
Classification by the type of claim targeted for assessment
■Claims pool
〇Loan claims for business companies
〇Leasing fee claims (individual or corporate)
〇Housing loan claims
〇Consumer loan claims
〇Credit loan claims
〇Accounts Receivable claims (current and future clients)
■Loans for property owning vehicles, investment interest in corporate bonds or sleeping partnerships, etc.
■Following instruments backed by those mentioned above
〇Preferential or mezzanine interest in preferential beneficiary rights, corporate bonds, loans, etc.
〇Subordinated interest in subordinated beneficiary right, investment in sleeping partnership, etc.
■Others
〇Guarantee fees in Japanese ESOP
〇Intangible assets
Classification by purpose
■Purpose of evaluation service for specific assets based on the Act on Securitization of Assets
■Purpose of verification of donation determination risk in securitization and inter-group transactions
■Purpose of sale loss calculation in securitization (subordinated interest ownership)
■Purpose of end-of-term market value assessment or market value annotation for owned claims, etc.
■Purpose of verification of the validity of market value assessment manual created by the client