Subject: File No. 4-607
From: gregory misiorek, CPA
Affiliation: bis llc

October 18, 2010

Q)To what extent and in what ways is the set of accounting standards (such as U.S. GAAP or IFRS) used by a company in its financial reporting significant to an investors decision to invest in that company?

A)Investors decision is influenced more by the strength of the management team, industry position, and stock price performance history than the actual statements or the standards applied in drafting them. Also, the consistency of applying the same standard which is comparable across industries and the whole global economy creates confidence necessary for any investment decision which should be taken under reduced risk of possible negative outcomes.

Q)To what extent are investors aware of the potential impact of incorporation of IFRS into the financial reporting system for U.S. issuers that they invest in or follow, compared with current U.S. GAAP? How significant of a change would the use of IFRS as compared to current U.S. GAAP be for investors?

A)Most investors do not have time to try to understand the differences between the standards and have to struggle with differences within US GAAP, FASB, ASC versus Internal Revenue Code Sections at the federal level and a multitude of local and state tax regimes. On the individual basis, the investor has to rely on other parties like advisors and investment administrators to help him or her understand the nuances in arriving at a different numerical outcome for the seemingly the same financial position.

Q)To what extent and in what ways would any of the current differences between U.S. GAAP and IFRS affect an investors use of information reported in the financial statements? How would completion of the convergence projects being jointly undertaken by the FASB and the IASB affect an investors use of those financial statements?

A)At the moment, the biggest difference is in reporting inventories. Compared to disallowance of LIFO valuation in IFRS, the rest of the differences are much smaller in impact. Investor would benefit from FASB and IASB issuing their standards jointly and in agreement. Access to timely financial information remains critical for the existing and new standards, but keeping differences to a minimum increases transparency and communication efficiency between the company and investing public.

Q)How do investors develop and maintain an understanding of the impact of accounting standards, whether IFRS or U.S. GAAP, on the companies that they currently, or may in the future, invest in? How confident are investors in their understanding of IFRS?

A)The best approach for investors to understand the differences or their lack is by making investments in the companies that report in either set of standards and comparing the performance in their portfolios. Currently, the investors are as confident in understanding IFRS as they are in understanding US GAAP. Investors need to continue educating themselves as to the impacts of standards change whether within US GAAP or outside.

Q)To what extent and in what ways would that change if IFRS were incorporated into the financial reporting system for U.S. issuers?

A)Incorporation of IFRS would make even smaller differences become even less relevant to the investing decisions. Including IFRS would not reduce the need of continuing education and applying common sense in making investment decisions.

Q)How much time do investors currently devote to understanding or maintaining an understanding of accounting standards? To what extent would the time increase or decrease if IFRS were incorporated into the financial reporting system for U.S. issuers?

A)Only by virtue of my profession, I devote significant amount of time in trying to understand accounting standards. I would like to spend less time trying to understand the differences and reduce the amount of time spent in gathering requirements for the current and future automation projects of financial reporting systems and spend that time trying to innovate and increase my own productivity as well as my clients. After IFRS have been in place for a significant number of years, e.g. five to ten, I would see the time spent trying to understand the IFRS differences greatly reduced. This assumes the differences themselves would be smaller per se by then.

Q)If IFRS were to be incorporated into the financial reporting system for U.S. issuers, to what extent would an investor (or an investors organization) have adequate resources to develop an understanding of IFRS, such as knowledgeable professionals, training materials, and access to standards?

A)The resources are easily accessible today with tools offered through the internet, social media, and Wikipedia as well as through services provided by professional services firms. The highest expense would be incurred in training and retraining knowledgeable professionals who may initially not perceive the value of changing standards and the bigger adjustment required that would pay off in the long run which may, for some, be too long a horizon.

Q)To what extent and in what ways do investors think incorporation of IFRS would affect comparability among different issuers financial statements? Which standards or treatments in IFRS that are elective are most important? To what extent do reporting format and disclosures affect any lack of comparability?

A)Comparability is the single biggest advantage of incorporating IFRS. The critical areas of financial statements are revenue recognition, financial instruments, and provisioning for current and future expenses. The current inventory accounting methods (LIFO vs FIFO) may become less problematic once the companies start seeing larger benefit of complying with IFRS for all of their measurements and financial positions.

Q)To what extent and in what ways would an investors investment decision-making processes change if a U.S. issuers financial statements were prepared using IFRS? Would investors need additional or different information to perform their analysis and, if so, what?

A)The only additional information required with IFRS would be reconciling two sets of standards for a period of few years to ensure consistency of historical data. After the initial adoption period the analytical tools are not really playing any role as technology is agnostic as to what kind of information is processed as longs as it is in an efficient and error free manner.

Q)To what extent and in what ways would an investors investment decision-making processes change if U.S. issuers were given a choice to elect to prepare their financial statements using either U.S. GAAP or IFRS? Would an investor have greater or lesser confidence in a companys financial reporting if a U.S. issuer were to elect to prepare its financial statements in accordance with IFRS rather than U.S. GAAP?

A)Given a choice, the biggest international filers would elect to prepare their statements according to IFRS and smaller filers according to US GAAP as that seems to be a less expensive decision at this time. Competitive pressures and the increased pool of IFRS trained professionals will reduce the number of incidents of filing according to by then minority standards.

Q)To what extent would use of IFRS by a U.S. issuer influence an investor to invest in that issuer? Not to invest? To hold? To sell?

A)Holding seems the most popular decision as the companies are slowly transitioning and competing with each other for markets. One way to investigate the new standard is to invest tentatively in a filer that is already using IFRS and compare it to a US GAAP filing portfolio components to assess any statistical significance of filing standards variation.

Q)Do the answers to the questions above change depending on the nature of the investor (for example, if the investor is a retail investor, mutual-fund investor, institutional investor, or asset or portfolio manager) or the class of investments (debt, equity or convertible securities)?

A)Yes, retail investor is almost certainly not interested in accounting standards. As the investor becomes larger even a small difference may play a role in deciding whether to invest or not to invest. All classes of investments are similarly affected, with common stocks being the least and convertible securities the most sophisticated instruments. Im only a retail investor, but I also use the infrastructure of one of the largest retirement fund administrators in the country and have experience of investing through other large brokerages as well.

Q)In what ways do investors educate themselves about accounting standards and changes to accounting standards? For example, do investors review accounting standard setters project activities and related board materials? Observe meetings? Review meeting summaries? Review other observers commentaries?

A)Investors can educate themselves by visiting the following internet address destinations:,,,,, and by maintaining professional relationships among themselves. This includes observation and reviewing of meetings, but also subscribing to tweets and automated messages from their professional associations. I do observe meetings and review both meeting summaries and other observers commentaries and I recommend them all.

Q)At what point do investors educate themselves about standard-setting activities? Is it during the standard-setting process? Is it after completion of the standard-setting process? Would the timing of investors education processes change if accounting standards for U.S. issuers were primarily developed by an organization other than the FASB?

A)Education is an ongoing and never ending process. Continuing education requires additional course load for each properly licensed professional. Education takes place at all stages of the standard-setting process. The biggest change would be if standards became the law of the land legislated by the US Congress and signed by the The President. Whether through FASB or its potential replacement, the institutional form is not critical for IFRS adoption in the United States. With todays advanced communication tools the location of the standards setting body plays a smaller role than in the past, but it is still important for maintaining any relevant presence.

Q)To what extent and in what ways do investors participate in the standard-setting process when the FASB and IASB set standards? Do they monitor standard-setting deliberations? Do they prepare response letters to requests for comment? Do they participate in the standard setters working groups and roundtables?

A)Today, investors can participate by signing up to come to the meetings and by keeping in touch via websites, blogs, and tweet feeds. Observers by definition cannot more actively participate in the meetings, so written comments remain the only valid form of communication with oral commentaries being effectively withheld from the investing public.

Q)To what extent does the timing of an investors education about a possible outcome of the accounting standard-setting process affect investment decisions? Do investors consider possible changes in accounting standards when analyzing an issuers reported financial information, even before any such change in accounting is required to be adopted?

A)The standards setting process is very slow when compared with the speed at which stock markets move that until the process is completed most investors will ignore the progress in adopting new standards or the lack of such progress. Before the change is actually implemented analyzing the financial statements is of limited value.

Q)Are there ways to improve the representation and communication of investors perspectives in connection with accounting standard setting?

A)The communication with investors can be improved by reducing the number of standard setting bodies and mandating one uniform federal law overwriting all administrative and local jurisdiction decisions (including tax). This idea seems very remote and I do not expect any changes in the process in my lifetime, but it is still a possibility.

Q)To what extent do investors believe more education or communication about accounting standards or accounting standard-setting is needed? If more education or communication is needed, how should the education or communication be delivered? By whom?

A)More than education a disciplined public debate is needed. Current social media should be incorporated into the possible communication campaign. Education will be sought after by the professionals and their associations, but the average investor will rely on others providing the information, raw data as well as interpretation of that datas meaning.

Q)How much time, if any, do investors need to improve their understanding of IFRS and related education processes so they have a sufficient understanding of IFRS prior to any incorporation?

A)Between one and two years should be sufficient to get proficient in understanding the basics of IFRS by the average licensed financial professional.

Q)What mechanisms would aid investors in improving their understanding of IFRS? Who should provide those mechanisms?

A)The following can be put to a higher use: social media, public debate, educational system, as well model reporting systems. They would all help in making the subject matter more relevant to the investing public.