Subject: File No. 4-600
From: Paul B.W. Miller, Ph.D.
Affiliation: Professor of Accounting, Univ. of Colorado, Colorado Springs

August 12, 2011

This communication is also provided by Paul R. Bahnson, Professor of Accounting, Boise State University, Boise, Idaho.

We find the proposal for condorsement to be deeply and fatally flawed in many respects.

First, it strikes us as a thinly veiled attempt to escape the mandates of the Securities Acts and Sarbanes-Oxley to the Commission to establish accounting principles applied in public filings. This evasion certainly exists with regard to the legislative intent, if not the letter of these statutes. This arrangement appears to us to be an attempt to avoid bringing the controversial adoption issue before the Congress, where it most likely would fail.

Second, apart from that serious fault, implementing this proposal would effectively turn the world's strongest and most independent standard-setting body into an ineffective agency with no power, authority, or influence.

Third, its implementation would also abrogate the Commission's ability to influence the IASB's political process for developing its pronouncements. While it is tempting to think of adoption as simply endorsing IFRS, either adoption or condorsement is tantamount to embracing the international board's complex and even suspect process. We are unable to recognize this movement as in any way advancing the best economic and political interests of the United States.

Fourth, neutralizing FASB and depending on the IASBs process would virtually guarantee that innovation would come slowly to financial reporting practice despite abundant evidence that substantial reform is needed, even desperately so.

Fifth, the proposal reflects an inappropriate derogation of the interests of the SEC's only constituents, the citizenry of the United States, and an unwise elevation of the interests of individuals, organizations, and nations who are not under the Commission's regulation. To wit, it truly does not matter whether any or all other nations have or have not adopted international standards. What does matter is that the SEC retain and exercise its mandated oversight of the FASB's deliberative process to ensure that the U.S. capital markets are protected and otherwise made more efficient and effective to the benefit of U.S citizens. To take a phrase from Justice Learned Hand, the pursuit of any other goal is mere cant without valid substance.

We have attached a copy of an essay published in the August 2011 issue of Accounting Today that more extensively develops our analysis of these fatal flaws.

In summary, because condorsement is so clearly unsuitable, it should not have been proposed in the first place. It follows that its implementation should not and indeed must not be given any further consideration. The only likely outcome is a determination that it is contrary to the Commissions statutory mandates.


Paul B. W. Miller, Ph.D., CPA
Paul R. Bahnson, Ph.D., CPA

(Attached File #1: 4600-143.pdf)