Subject: File No. S7-27-08
From: Phil Ameen
Affiliation: Retired

April 29, 2009

Phil Ameen
1325 Smith Ridge Road
New Canaan, CT 06840
203.972.9218
pameen@msn.com

April 28, 2009

Ms. Elizabeth Murphy
Secretary
Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549-1090

RE: File number S7-27-08

Dear Ms. Murphy:

I am writing in response to the Commissions Proposed Rule, Roadmap for the Potential Use of Financial Statements Prepared in Accordance with International Financial Reporting Standards by U.S. Issuers (Roadmap). I am a private investor, a devoted user of financial information, and am retired Principle Accounting Officer of General Electric Company.

I am cautiously supportive of a unified, global set of accounting standards. That support arises from reasons set forth in the Roadmap for me, the most important of these reasons is the potential ultimate reduction of costs of capital when discussions about financial position and results of operations can be compared by investors without translation of anything but the reporting tongue and currency. Less obvious but also important is the potential for real cost reduction from global statutory ledger simplification that is, it costs less to maintain statutory Italian books that are the same as the books that report to parent company and those investors. The ability to direct undiluted attention to a single ledger will axiomatically improve the cost-effectiveness, but also will improve the ledger quality for the entire enterprise.

Costs of accounting and reporting, like all costs, are of increasing concern. Incrementally, one well-intended standard and one well-intended regulation at a time, we have multiplied the demands on increased staffs of technical experts to a degree that would shock our recent forebears. Some of this cost base is simply required to be a public company, and consequently expenditures are not subject to a return test, unlike virtually any other cost. The consequences are worth enumerating
Funds spent on accounting resources are not available for research, development, marketing, capital investment or dividends. Doubtless there is a point, different for each investor and perhaps for each investment for each investor, at which that investor would rather have available funds expended on new products than on financial accounting and reporting or internal control systems. It is unclear to me that regulation rather than disclosure is the optimal means of reaching the optimal balance. But costs, as well as benefits, for any overhead of this sort are exceptionally difficult to measure and to evaluate. Consequently, while I will do my best in this response to provide relevant observations, I acknowledge the extraordinary challenge that the Commission has ahead of it in reaching the right decision.
Market reaction to such hotly-contested accounting matters as for stock compensation, other postemployment benefits, derivatives and goodwill accounting seems to have been far more muted than most feared. Markets in fact have demonstrated their competence at distinguishing mere accounting changes from performance. Markets continue to react, not only to accountings revenue and earnings amounts, but to unaudited disclosures of same store sales, order trends, backlog, delinquencies, and productivity.
Despite the belief of many that the best disclosures are those that show where managements true priorities lie what for example could be more telling than a managements discussion and analysis that altogether omits any mention of liquidity? U.S. regulatory regimes have chosen to provide their registrant population with checklists for regulator-chosen topics. A US registrant would be careless not to apply those checklists, but more important perhaps, management has little or no incentive to go beyond the minima. Consequently, some believe, the protected investor is better informed about regulator concerns than about the genuine concerns of management, and must look outside the financial reports to ascertain managements priorities.

While I believe that global accounting standards are a worthy objective, I strongly believe that minimization of the transition costs will pay enormous dividends on many fronts -
Markets are extremely comfortable with accounting changes, having absorbed and dealt with them routinely for over 50 years. One key component of this success has been isolation of changes so investors like me can reflect on and react intelligently to what we are being told. An abrupt change in the entire accounting schemata, like that proposed in the Roadmap, will doubtless impose enormous strain on the markets digestive tract, whatever the level of reconciliation and disclosure.
A second key to financial reportings historical success has been the ability of preparers generally to apply the right resources to changes. The apparent global shortage of trained accountants places particular emphasis on this point, evidenced by accounts I have heard of the EU transition to IFRS, where the retrospective view appears close to consensus that the transition, approached differently, could have achieved higher quality financial reporting at lower cost. The changes that will be required for the U.S. affect a vast range of people in a global organization, from a handful for the changes to stock option accounting to thousands of on-the-ground non-accountants for the likely changes to revenue recognition, to, in the case of modifications to contingency accounting, thousands of non-employee attorneys, thoroughly grounded, in the concepts of SFAS No. 5 and Interpretation 14, in the contingent minimum required to be recorded in the frequent instance in which no outcome is probable. Principle Accounting Officers can, and have, dealt with such changes individually, have estimated the effects, communicated with users, deployed the resources, supported the audits, informed the Boards and modified the ledgers and control systems. But no US entity has attempted changes on this scale before, and the likelihood of success, or reasonable success, seems low.
There is simply no transition method that is capable of eliminating, even without resource constraints, differences in IFRS bases the very fact that US companies have attributed goodwill to entities that were not acquired has created a permanent gap between US entities and their global counterparts that seems quite irremediable ... possibly unimportant, but irremediable nevertheless. Other examples come to mind, and more will doubtless surface as we peel this onion. Given this enormous difference in the starting point for future measurements of matters like impairments and return on capital, caution seems warranted.

While the Roadmap is a comprehensive look at one of the many possible paths to global accounting standards, essentially the path used by the EU, I am concerned that a different path one that is significantly more cost effective might inadvertently have escaped consideration. I urge the Commission to take the time to consider alternatives carefully.

My Recommendation Evaluate a Stepwise Approach to IFRS
The approach I recommend as an outline differs from the Roadmap because it would result in stepwise convergence, an approach taken by Canadians in their conversion to IFRS. Final adoption of IFRS, and application of IFRS 1, would not occur until the policies had been adopted or were, in that final reporting period, in process of adoption.

I am mindful and appreciative of the enormous progress that the FASB has made in its codification project. Codification will shortly put into place a seemingly ideal vehicle for IFRS conversion. For the first time ever, standards setters can essentially remove a discreet, codified chapter in its entirety and insert the related IFRS material in its place, with specific thought given to effective date and transition requirements. IFRS 1 provides significant flexibility for adoption, which perhaps leads to cost reductions, but challenges comparability. One example among many is the different IFRS definition of discontinued operations while simply a display matter, discontinued operations reporting can be extremely difficult, and absolutely requires access to the books and records of the discontinued operation. This access may well not be possible for a sold business. The effective date of this reporting should simply change the definition, not engage in expensive or impossible look-back, or, worse, to consider partially recast historic financial statements to somehow be comparable to those presented under IFRS discontinued operations rules. This is a compromise, and clearly short of the ideal level of perfect comparability, but remains in the realm of possibility.

Obvious advantages to this recommended approach are extensive:
Stepwise convergence, although disruptive, is easier than Big Bath, both for reporting entities and for investors.
Stepwise convergence gives significantly higher confidence that the meaningful choices under a principles based approach will be debated and vetted. Again, reference to the EU experience is helpful several IFRS companies have stated that they made decisions on the basis of expediency - minimizing the transition effects, sometimes using hard to control top side adjustments, sometimes selecting the top 5 areas to address, rather than thoughtfully, issue by issue, considering with top management and Boards what is best for each of the dozens of accounting policies affected. For US entities required to maintain controls by Sarbanes-Oxley, this capacity issue is vital.
Stepwise convergence essentially or completely eliminates the disruption to legal contracts, including defense contracts, where it is quite common to state provisions measured in accordance with US generally accepted accounting principles. Under this approach, the IFRS financial statements will be compliant.

While I am less concerned with what the specific transition requirements are (at least until I see them), the obvious leading first-priority candidates are codification sections developed jointly that have inexplicably, perplexingly different reporting results. We need urgently to abandon the well-intentioned but xenophobic approach that led the FASB and IASB to careen in irreconcilable directions at the end of these processes.

I BELIEVE THE FASB SHOULD ADOPT IFRS FOR THESE AREAS, excepting taxes, where the global community is leaning towards changes towards the US system, a conceptually superior and abundantly more cost-effective approach.

Please do not for a moment fall for the standards setters claims that these matters are already converged on the superficial grounds that they share a framework. Stock compensation for FASB and IFRS are one example from an identical framework, the accounting approaches yield different measurement dates, measurement methods, attribution periods and, sometimes significantly, tax results. Similar, and much more important, was the recently-completed joint project on business combinations. My view on these almost there projects is that, aside from conversion projects under way, FASB should be directed to replace its pronouncements with those of the IASB by the end of 2009, and should be instructed to issue identical standards for joint projects in the future. Details can be worked out for example, I cannot think of a reason that FAS 141(r) on business combinations should ever go effective, save that it has already done so. I recommend suspending its effective date pending transition to IFRS 3.

Revenue recognition is the second matter of attention because it is the backbone of any accounting system. It is remarkable how often revenues recognized under the Gordian Knot of over 200 US revenue recognition pronouncements are essentially identical to those under the handful of principles-based IFRS statements, mostly IAS 11 and 18. Differences exist to be sure global accountants react in shock and awe when their US counterparts recite the rules of SOP 97-2 or SAB 104. Conversion, however, from the comfort of rules to the higher intellectual demands of principles must not be undertaken casually.

Costs
A complete survey of accounting policies is a necessary first step for any enterprise undertaking an IFRS conversion, not least because IFRS explicitly requires that all similar transactions in the enterprise (including affiliates) be accounted for similarly. Following the survey, accounting will be chosen with the aid of not only the accountants and auditors, but also top management and IT and operations personnel who will need to implement the changes. Inevitably following this deep an investigation, some customer contract provisions will surface that entities will seek to change. Then, systems, including ledgers and related internal controls will need to be changed and tested. Responsible line personnel will need to be trained. Systems changes often are queued for at least 18 months, so two conclusions emerge first, if this were the only change an entity were facing, 3 years would be a very short time for implementation. And second, running parallel well-controlled systems for the three restatement years envisioned by the proposal is likely not possible in most cases. Some will attempt to resolve this with so-called top-side entries, particularly given that the Roadmap essentially requires parallel accounting for three years. Top-side approaches have a history of being difficult to control, and are unlikely to achieve reliably this objective.

I am very skeptical that it is possible to reach a knowledgeable answer to questions about the costs of a big bath conversion in U.S. financial reporting. The closest analog is the EU conversion, but the differences are many. First, the stable platform to which the EU was converting was frozen only 12 months before the effective date not sufficient time for a complete conversion. Consequently, I understand, as stated above, that many EU enterprises did somewhat less than the complete conversion that will be required of US entities for example, little was said about the IFRS requirement to componetize fixed assets for depreciation purposes. No one in the feted history of componetized accounting approach for depreciation has dared to suggest that the effect on reported results will be significant, or that the costs will be modest. Either EU companies already used componentized depreciation (different than my experience would lead me to believe), or they quietly adopted sweeping changes to very complex legacy fixed asset systems or, my suspicion, they simply continued with their non-componetized approaches, concluding that they were close enough. The same logic holds for the requirement to conform affiliate and subsidiary accounting policies an extraordinary, perhaps impossible, undertaking affecting hundreds, sometimes thousands, of entities, the requirement for which passed without comment at the EU adoption.

Regulatory Tolerance for Range of Acceptable, Compliant Approaches
It is important that a version of IFRS with US flavors be avoided. If this happens, however it happens, the entire effort towards global accounting will have been a futile waste. I understand this is a difficult issue, and not just in the U.S. I am not confident that any countrys law provides support for subjecting its regulations to clearance from other jurisdictions, but comparable global reporting demands such regulatory consensus. This issue is an extremely important one and one that must surely be resolved in the near future, lest we continue what appears already to be a drift towards many diverse national interpretations. The temptation of regulators in the future will be, not to use the principles-based standards to accept a predictable variety of appropriately-described accounting, but to deduce a single solution from many available, and to impose that solution on the specific, local regulated registrants. Unfortunately, that road leads back to diversity. Some have observed that the principles based IFRS are simply immature, and believe that regulators will hammer outliers, one by one, into identical policy positions. That outcome would not be as bad as the potential outcome, however, in which local regulation is hammering outliers into positions irreconcilable, and unreconciled, to positions on similar matters in other jurisdictions.

While I do not have sufficient background in regulatory matters to suggest an answer to this issue, it is critical that the SEC be able to answer how it would react to a crisis such as that which led to SFAS 157(e). Congressional demands were satisfied quickly in that case, but the US Congress has no authority over the IASB, and IASB due process has limited response times to about 12 months, far longer than the weeks in which FAS 157(e) was issued.

Equally important, and again an issue to which I do not have background sufficient to suggest an answer, is that the SEC establish reliable protocols for review of principles-based accounting approaches. Many of these will already have been vetted by non-US regulators by the time US registrants approach the SEC Staff. It is important, I believe, that the protocols be established and tested before the onslaught of such issues appears.

Questions

1. Do commenters agree that U.S. investors, U.S. issuers and U.S. markets would benefit from the development and use of a single set of globally accepted accounting standards? Why or why not? What are commenters views on the potential for IFRS as issued by the IASB as the single set of globally accepted accounting standards?

There are doubtless benefits in a lingua franca for financial reporting, and for that, IFRS is the last, best hope. Costs are significant, however, and need to be studied carefully before we conclude what their relationship to the benefits will be.

2. Do commenters agree that the milestones and considerations described in Section III.A. of this release (Milestones to be Achieved Leading to the Use of IFRS by U.S. Issuers) comprise a framework through which the Commission can effectively evaluate whether IFRS financial statements should be used by U.S. issuers in their filings with the Commission? Are any of the proposed milestones not relevant to the Commissions evaluation? Are there any other milestones that the Commission should consider?

I believe the timing of IFRS adoption in the U.S. can probably be accelerated by adopting a stepwise approach as I have suggested. In my view, a significant number of issues could be conformed almost immediately virtually all issues conformed by 2012 and the remainder conformed by 2014. Please see my letter, however, for my interpretation of conformity. It will take many decades before the different starting points between European and US enterprises will cease to have financial reporting effects.

3. Do commenters agree with the timing presented by the milestones? Why or why not? In particular, do commenters agree that the Commission should make a determination in 2011 whether to require use of IFRS by U.S. issuers? Should the Commission make a determination earlier or later than 2011? Are there any other timing considerations that the Commission should take into account?

No. See main letter. Alternative paths are no doubt available and must be analyzed carefully. At least, serious consideration should be given to the stepwise approach used by Canada and recommended herein.

4. What are commenters views on the mandated use of IFRS by U.S. issuers beginning in 2014, on an either staged-transition or non-staged transition basis? Should the date for mandated use be earlier or later? If the Commission requires the use of IFRS, should it do so on a staged or sequenced basis? If a staged or sequenced basis would be appropriate, what are commenters views on the types of U.S. issuers that should first be subject to a requirement to file IFRS financial statements and those that should come later in time? Should any sequenced transition be based on the existing definitions of large accelerated filer and accelerated filer? Should the time period between stages be longer than one year, such as two or three years?

See main letter. I defer to others on the appeal of early adoption, but I believe few entities would be willing to commit to such a path at this point given the cost and the inability of the Commission to guarantee that future Commissions will support mandatory conversion.

Piecemeal adoption, as I recommended in the main letter, removes all of these troublesome issues, in my view.

5. What do commenters believe would be the effect on convergence if the Commission were to follow the proposed Roadmap or allow certain U.S. issuers to use IFRS as proposed?

Modest at most, perhaps none. I have yet to see any registrant interest in changing to IFRS before the requirement to do so, and the silence from users has been deafening.

6. Is it appropriate to exclude investment companies and other regulated entities filing or furnishing reports with the Commission from the scope of this Roadmap? Should any Roadmap to move to IFRS include these entities within its scope? Should these considerations be a part of the Roadmap? Are there other classes of issuers that should be excluded from present consideration and be addressed separately?

No comment.

7. Do commenters agree that these matters would affect market participants in the United States as described above? What other matters may affect market participants? Are there other market participants that would be affected by the use by U.S. issuers of IFRS in their Commission filings? If so, who are they and how would they be affected?

See main letter.

8. Would a requirement that U.S. issuers file financial statements prepared in accordance with IFRS have any affect on audit quality, the availability of audit services, or concentration of market share among certain audit firms (such as firms with existing international networks)? Would such a requirement affect the competitive position of some audit firms? If the competitiveness of some firms would be adversely affected, would these effects be disproportionately felt by firms other than the largest firms?

No comment

9. What are commenters' views on the IASBs and FASBs joint work plan? Does the work plan serve to promote a single set of high-quality globally accepted accounting standards? Why or why not?

See main letter. Jointly developed standards should be adopted for US registrants in the IFRS version (with specific consideration of effective date and transition for standards already issued). Those in process should be excluded from the remainder of the Roadmap as I discuss in my main letter.

10. How will the Commission's expectation of progress on the IASBs and FASBs joint work plan impact U.S. investors, U.S. issuers, and U.S. markets? What steps should be taken to promote further progress by the two standard setters?

I have long held believe that standards setting should be viewed as a single project, not a process. The difference is that projects have a deadline, but processes are indefinite. There is no reason that we should not move beyond our current phase of standards setting in the next decade, then respond only to developments. The next accounting answer on revenue recognition or pensions or leases or earnings per share or accounting changes should be the last. I am watching with interest some of the academic work being done in the area of the conceptual framework it seems increasingly apparent that the asset/liability framework model was a noble but failed effort. Should the standards setters reach this conclusion, they would need additional time to cure the existing set of standards.

11. The current phase of the IASBs and FASBs joint work plan is scheduled to end in 2011. How should the Commission measure the IASBs and FASB's progress on a going-forward basis? What factors should the Commission evaluate in assessing the IASB's and the FASB's work under the joint work plan?

See question 10.

12. What are investors', U.S. issuers', and other market participants' views on the resolution of the IASB governance and funding issues identified in this release?

I do not believe there is a real risk that the IASB will run out of funding. Mindful of the apparent commitment from the EU, which brings significant independence issues, I actually believe that the major global audit firms should be the sole supporters of the IASB this assessment will become overhead, distributed evenly across their global audit base. This is a far better solution than depending on charity or public funds. In any event, I have never understood the argument that an organization without guaranteed funds would set inferior accounting standards quite the contrary, I suspect that such an organization would be motivated to set the best standards possible to justify its existence.

13. What steps should the Commission and others take in order to determine whether U.S. investors, U.S. issuers, and other market participants are ready to transition to IFRS? How should the Commission measure the progress of U.S. investors, U.S. issuers, and other market participants in this area? What specific factors should the Commission consider?

It is unclear that this role is one that the SEC can or should undertake. Measurement of progress is, to my knowledge, without precedent and it is quite unclear what the Commission can do. I suspect that no one was ready to transition to FASB 157 or 161, but never heard this question from the SEC. Instead, a logical path to a single set of accounting standards should offer sufficient assurance.

14. Are there any other significant issues the Commission should evaluate in assessing whether IFRS is sufficiently comprehensive?

No.

15. Where a standard is absent under IFRS and management must develop and apply an accounting policy (such as described in IAS 8, for example) should the Commission require issuers to provide supplemental disclosures of the accounting policies they have elected and applied, to the extent such disclosures have not been included in the financial statements?

No. Having taken this step, it would be quite impossible for the Commission to refine otherwise robust requirements of IFRS, leading to a local, US GAAP. Moreover, the IFRS requirements for these disclosures are sufficiently robust and do not need US enhancement.

16. Do commenters agree that certain U.S. issuers should have the alternative to report using IFRS prior to 2011? What circumstances should the Commission evaluate in order to assess the effects of early adoption on comparability of industry financial reporting to investors?

Yes, although I believe that alternative ought be unrestricted. I do not believe that there will be much interest among U.S. registrants in early adoption, and consequently believe the proposed high hurdles are unlikely to be relevant. Markets are, obviously, comfortably dealing with lack of comparability when investing in non-U.S. registrants. I do not believe the Commission should dissuade U.S. registrants who, for any reason, decide to adopt IFRS. Whatever experience we as a profession gain from the early adopters will benefit every successor adoptor.

17. Do commenters agree with the proposed criteria by which the comparability of an industrys financial reporting would be assessed? If not, what should the criteria be?

No. See question 16.

18. Which eligible U.S. issuers have the incentive to avail themselves of the proposed amendments, if adopted? Are there reasons for which an issuer that is in a position to file IFRS financial statements under the proposed amendments would elect not to do so? If so, what are they?

I do not know the answer to this question. See question 16.

19. Is limiting the proposal to the largest 20 competitors by market capitalization an appropriate criterion? Should it be higher or lower? Should additional U.S. issuers be eligible to elect to report in IFRS if some minimum threshold of U.S. issuers (based on the actual number or market capitalization of U.S. issuers choosing to report in IFRS) elects to report in IFRS under the eligibility requirements proposed? To the extent additional U.S. issuers are not permitted to report in IFRS even if such a minimum threshold is met, are such non-eligible U.S. issuers placed at a competitive disadvantage vis--vis U.S. issuers reporting in IFRS?

See question 16.

20. Would the use of different industry classification schemes as proposed be unclear or create confusion in determining whether an issuer is IFRS eligible? Should we require that all issuers use a single industry classification scheme? Why or why not?

See question 16.

21. What impact will the Commission's determination to allow an industry to qualify as an "IFRS industry" without majority IFRS use have on the Commission's objective of promoting comparability for U.S. investors? How will this impact U.S. investors, U.S. issuers, and U.S. markets? Is the use of IFRS more than any other set of financial reporting standards the right criterion? Should it be higher or lower?

See question 16.

22. Should the Commission permit additional industries to qualify as IFRS industries, and thus additional U.S. issuers to become early adopters, as more countries outside the U.S. adopt IFRS? Alternatively, should the group of potential industries and early adopters be limited to those that qualify at the time the Commission determines to permit early adoption?

See question 16. I suppose that, if this aspect of the Roadmap is enacted, I would endorse the SECs publishing industries that will qualify, although I would be surprised if many entities made that election. Such a list could save a lot of wasted effort among entities whose Boards will send staffs on difficult, ultimately and fruitless, errands.

One element on which I am unclear is the question of how to handle very diversified enterprises such as General Electric or Berkshire Hathaway. Depending on the business, some compete for capital mostly in the US (television and motion pictures, for example, and Sees Candy), but many compete against global entities (aircraft engines, power generation, healthcare products, and much of financial services). There is not a relevant set of comparisons of which I am aware.

23. Do commenters have any suggestions about the procedural aspects of the proposed eligibility requirements, e.g., the procedure for obtaining a letter of no objection from the Commission staff or the minimum contents of the required submission? Is such a procedure necessary? Do commenters agree that such a procedure would assist both issuers and investors? Should the procedural aspects of the proposed eligibility requirements be less formal? Should the procedure be similar to that in the no action letter process regarding shareholder proposals under Rule 14a-8 of the Exchange Act? Should the letter of no objection be advisory only? Should obtaining a letter of no objection be optional? Is the method for calculating eligibility clear and appropriate or are there alternative suggestions that should be considered? Should the Commission publish standards or criteria to guide the staffs determination? What do commenters believe the respective role of the Commission and its staff should be in making these eligibility determinations? Should the Commission post on its Web site all submissions and responses, including those for which the staff does not issue a no-objection letter?

See question 16. I strongly believe that the procedure is unnecessary. Listing submissions and responses on its Web site is something to which I do not object.

24. Currently, some public companies in the U.S. public capital market report in accordance with IFRS and others in accordance with U.S. GAAP. Today, however, this ability to report using IFRS exists only for foreign companies. What consequences, opportunities or challenges would be created, and for whom, of extending the option to use IFRS to a limited number of U.S. companies based on the criterion of improving the comparability of financial reporting for investors?

See question 16. The proposal would concede an enormous competitive cost advantage in US markets to non-US companies given the extremely difficult roll-back reports and reconciliations it requires. From a competitiveness standpoint, I am confident the Commission will elect not to apply these costly provisions.

My recommended stepwise conversion solves the cost and comparability challenges.

25. Do commenters agree that the criterion of enhanced comparability is the correct one? Are there other criteria that should be used? For example, should issuers be eligible based on their size or their global activities? If a size criterion were used to include the largest U.S issuers, what should the cut-off be? Should there be a criterion based on the absence of past violations of the federal securities laws or based on shareholder approval?

See question 16.

26. Do commenters agree that the proposed required disclosures are appropriate? If not, what disclosures should be provided?

No. These proposed disclosure requirements are sufficiently costly to be a real disincentive to adoption. See main letter and question 24.

27. What are commenters views on the accounting principles that should be used by those U.S. issuers that elect to file IFRS financial statements if the Commission decides not to mandate or permit other U.S. issuers to file IFRS financial statements in 2011? Should the Commission require these issuers to revert back to U.S. GAAP in that situation?

This risk is one of the many that make early adoption a prohibitively costly gamble.

28. Is it appropriate to exclude investment companies, employee stock purchase, savings and similar plans and smaller reporting companies? Are there other classes of issuers or certain industries that should be excluded?

No comment.

29. Should we limit the first filing available to an annual report on Form 10-K, as proposed? If not, why not? Is the proposed transition date of fiscal years ending on or after December 15, 2009 appropriate? Should it be earlier or later, and why? What factors should be considered in setting the date?

No comment.

30. Are there any considerations that may make it difficult for an eligible U.S. issuer to file IFRS financial statements? Are there considerations about filing IFRS financial statements that would weigh differently for an eligible U.S. issuer than they would for a foreign private issuer that files IFRS financial statements?

Yes, there are many, many such issues. See cover letter. I did not mention LIFO inventory accounting in the cover letter as it seems a threshold matter simply in need of quick resolution. On the other hand, I note that LIFO has held this status, unchanged, for years. I note that the SEC now provides non-GAAP reporting that is perfectly suited to LIFO conformity, and trust that SEC staff will take it upon itself to make a proposal along these lines to the Internal Revenue Service. Two alternatives likely cannot be implemented first is adoption throughout the financial statements, including affiliates, of LIFO because that method is simply unacceptable under IFRS second is the SEC imposing a tax penalty on LIFO companies.

31. What difficulties, if any, do U.S. issuers anticipate in applying the requirements of IFRS 1 on first-time adoption of IFRS, including the requirements for restatement of and reconciliation from previous years U.S. GAAP financial statements?

These are extreme. See main letter.

32. What would affect a companys willingness to use IFRS if it were eligible to do so? For example, some market indices, such as the SP 500, currently only include issuers that report in U.S. GAAP. Are there other investment instruments or indices that would affect companies that would be eligible to use IFRS under the proposed criteria? Would the ability to be included in the SP 500, or other instrument or index affect whether an eligible U.S. issuer decides to use IFRS? Would these indices be prepared to accept IFRS, and, if so, how long would it take for them to change their criteria? Would more issuers be likely to use IFRS after they do? Should these considerations influence our decision on whether or when to permit or require U.S. issuers to use IFRS in their Commission filings?

I cannot answer these questions, but compliment the Staff for having identified the question. A stepwise conversion would not encounter these difficulties.

33. To facilitate the transition to IFRS, should we add an instruction to Form 10-K and Form 10-Q under which an issuer could file two years, rather than three years, of IFRS financial statements in its first annual report containing IFRS financial statements as long as it also filed in that annual report three years of U.S. GAAP financial statements? Under such an approach, an issuer could, during its third year after beginning its IFRS accounting, choose to file a Form10-K/A with IFRS financial statements covering the previous two fiscal years.113 For the current (third) fiscal year, the issuer could then file quarterly reports on Form 10-Q using IFRS financial statements.114 For example, a calendar-year issuer that began its IFRS accounting for the 2010 fiscal year would use U.S. GAAP to prepare its Forms 10-Q and Forms 10-K for the 2010 and 2011 fiscal years. In 2012, that issuer would have the option of filing a Form 10-K or a Form 10-K/A with IFRS financial statements for 2010 and 2011, which would allow it to use IFRS in its quarterly reports during 2012, or continuing to use U.S. GAAP. In either case, the Form 10-K covering the 2012 fiscal year would include three years of IFRS financial statements.

Any savings in these transition costs are welcome, but any overlap in SOX-compliant reporting is costly.

34. What are commenters views on Proposals A and B relating to U.S. GAAP reconciling information? Which Proposal would be most useful for investors? Is there a need for the supplemental information provided by Proposal B? Would the requirement under Proposal B have an effect on whether eligible U.S. companies elect to file IFRS financial statements? To what extent might market discipline (i.e., investor demand for reconciliation information) encourage early adopters to reconcile to U.S. GAAP even in the absence of a reconciliation requirement?

See cover letter.

35. What role does keeping a set of books in accordance with U.S. GAAP play in the transition of U.S. issuers to IFRS? What impact will keeping U.S. GAAP books have on U.S. investors, U.S. issuers, and market participants?

See cover letter.

36. How valuable is reconciliation to U.S. investors, U.S. issuers, and market participants? How valuable is reconciliation to global market participants? Are there some financial statements (such as the statement of comprehensive income) which should not be required to be reconciled to U.S. GAAP?

See cover letter.

37. Under either Proposal, would investors find the U.S. GAAP information helpful in their education about IFRS or in being able to continue to make financial statement comparisons with U.S. (and non-U.S.) issuers that continue to prepare U.S. GAAP financial statements? Would one alternative be more helpful to U.S. investors, regulators, or others in understanding information prepared under IFRS or to continue to make comparisons with issuers who prepare U.S. GAAP financial statements?

See cover letter.

38. Should we be concerned about the ability of U.S. issuers that elect the early use of IFRS to revert to U.S. GAAP? Would either Proposal be preferred to facilitate such a reversion, should that be appropriate or required as described above?

It would be imprudent of any issuer to be placed in this position. A stepwise conversion would eliminate that risk, one of the significant reasons I endorse it.

39. Under Proposal B, should the proposed U.S. GAAP financial information be audited? Is the proposed role of the auditor appropriate? Should the proposed U.S. GAAP financial information be filed as an exhibit to the Form 10-K annual report, instead of as part of the body of the report? Is the proposed treatment of the information appropriate? For example, should the information be deemed furnished and not filed for purposes of Section 18 of the Exchange Act? Should we require that the supplemental U.S. GAAP information be contained in the annual report that is prepared pursuant to Exchange Act Rule 14a-3(b)? Should the supplemental U.S. GAAP information appear as a note to the financial statements? Is the proposed role of the auditor appropriate?

See cover letter.

40. Under either Proposal, should we provide more guidance as to the form and content of the information called for? Under either Proposal, should we require that additional information be provided, such as a full reconciliation as is required under Item 18 of Form 20-F?122 Is there an intermediate position between the reconciliation under Proposal B and the reconciliation under Item 18 of Form 20-F?

See cover letter.

41. Under either Proposal, should we require that the issuers Managements Discussion and Analysis of Financial Condition and Results of Operations prepared under Item 303 of Regulation S-K contain a discussion of the reconciliation and the differences between IFRS as issued by the IASB and U.S. GAAP?

Given that the reconciliation is not financial position, results of operations, liquidity or cash flow, it would seem odd for it to be addressed in Managements Discussion and Analysis. I am unable to see how this would add useful information.

42 Should we require supplemental U.S. GAAP information, such as that in Proposal B, for all quarterly periods covered by IFRS financial statements?

This seems excessive, and I do not believe it to be appropriate.

43. Should the option to report under IFRS, whether under Proposal A or Proposal B, automatically terminate as of a date certain? If so, should that date be a set period of time? For example, should it be three years following the effective date of an adopting release? Should it be a longer or shorter time period? Should it be measured from another date (e.g., the first permissible compliance date or the date of the first letter of no objection issued)? What considerations should be part of our decision as to the date or duration?

A timely, stepwise convergence would, I believe, completely eliminate interest in early IFRS reporting by U.S. issuers.

44. Under Proposal B, does providing U.S. GAAP information require issuers electing to file IFRS financial statements to maintain sufficient information, records and controls in order to revert back to U.S. GAAP? If not, what additional information, records or controls must be maintained?

This will depend on specific circumstances, but for books of original entry maintained at widely dispersed locations in many countries, many currencies and many languages, is not a trivial question. This is a significant reason that stepwise conversion is my preferred alternative.

45. Under Proposal A, what additional information, records or controls would be necessary for U.S. issuers electing to file IFRS financial statements to maintain so that they could revert back to U.S. GAAP?

See question 44.

46. Are the criteria for issuers eligible to file financial statements in accordance with IFRS as issued by the IASB clear from the proposed definition of IFRS issuer? If not, in what way is the definition unclear, and what revisions would be necessary to eliminate any lack of clarity?

No comment.

47. Is there any ambiguity in the proposed amendments regarding the reasons for the distinction between IFRS issuer and foreign private issuer, and the application of the rules to each? If so, what is the nature of the ambiguity and what would be necessary to provide clarity?

I believe these proposed amendments are clear.

48. Is the application of Regulation S-X and Regulation S-K to financial statements prepared in accordance with IFRS as issued by the IASB clear from the proposed amendments, or are there other items within those regulations that should be specifically amended to permit the filing of financial statements prepared in accordance with IFRS as issued by the IASB? If so, how would the application of Regulation S-X and Regulation S-K be unclear if there were no changes to those other than those proposed? What changes would be suggested in order to make them clear?

I do not suggest any changes other than those proposed.

49. Is there any reason why an issuer would be unable to assert compliance with IFRS as issued by the IASB and obtain the necessary opinion from its independent auditor?

No comment.

50. Is the application of Articles 1 through 12 of Regulation S-X to IFRS financial statements clear from the proposed Rule 13-02? If not, what further clarification is necessary? Are there other rules contained in Articles 1 through 12 that do not, or may not, apply to financial statements prepared in accordance with IFRS as issued by the IASB and that are not addressed in proposed Rule 13-02? If so, what are they and how should they be addressed?

I have no additional suggestions.

51. A U.S. issuer engaged in oil and gas producing activities that has followed the successful efforts method and carries forward that practice under IFRS will have consistent reserves disclosure under FAS 19, FAS 69 and Industry Guide 2. If that issuer were to apply another method of accounting permitted under IFRS, it may lead to inconsistencies between Industry Guide disclosure, FAS 69 disclosure, and the financial statements. Would such potential inconsistencies create ambiguity for users of that information or otherwise be a cause for concern? If so, what would be an appropriate means of addressing the inconsistencies?

While not an area in which I have first hand experience, this appears to be an area in which stepwise convergence would lead to the optimal answer that is, financial statements and Industry Guide disclosures that are consistent.

52. With regard to specific references to U.S. GAAP in our regulations, should we amend the references to U.S. GAAP pronouncements to also reference appropriate IFRS guidance, and, if so, what should the references refer to? Would issuers be able to apply the proposed broad approach to U.S. GAAP pronouncements and would this approach elicit appropriate information for investors? Should we retain the U.S. GAAP references for definitional purposes?

If the Commission follows the Roadmap approach, I believe that both IFRS and U.S. GAAP references will be necessary. Obviously, this is another issue to which stepwise convergence provides a cost-effective solution.

53. With regard to general references to U.S. GAAP, is our proposed approach appropriate and sufficiently clear? If not, how should these matters be addressed differently and why?

Yes, the proposal is appropriate and sufficiently clear.

54. Is our proposed approach sufficiently clear on how to address general caption data, segment data and schedule information outside the financial statements? If not, what changes should we make? Are there other places in our regulations that need to be addressed?

Yes, the proposal is appropriate and sufficiently clear.

55. Will three years of selected financial data based on IFRS be sufficient for investors, or should IFRS issuers be required to disclose in their selected financial data previously published information based on U.S. GAAP with respect to previous financial years or interim periods?

Reconstructing accounting for three years is very costly. While there are financial data that management may elect to reconstruct in order to present trends clearly, I believe this should be left to them given their responsibility to act as responsible custodians for their investors.

56. Should the Commission address the implications of forward-looking disclosure contained in a footnote to the financial statements in accordance with IFRS 7? For example, would some kind of safe harbor provision or other relief or statement be appropriate?

I would endorse a safe harbor provision for forward-looking disclosures.

57. Is the proposed disclosure in Form 10-K sufficient in prominence and content to indicate to investors that the issuer has changed its basis of financial reporting from that used in previous filings? If not, what further disclosure should be provided, and where? Should we require that an issuer disclose the criteria under which it is eligible to file IFRS financial statements? Should issuers be required to reference the letter of no objection in their first IFRS filing?

The proposed disclosure seems sufficient.

58. Should we amend Form 8-K to require forward-looking disclosure relating to an issuers consideration of whether it will file IFRS financial statements in the future? If so, what type of information should be disclosed, and at what point in time prior to the issuer actually filing IFRS financial statements? Would a requirement to make such forward-looking disclosure have any impact on an issuers decision to adopt IFRS? If so, what would the effect be?

No comment.

59. Are there issues on which further guidance for IFRS issuers would be necessary and appropriate?

None.

60. Is the application of the proposed rules to the preparation of financial statements and financial information described in Sections V.D and V.E above sufficiently clear? If not, what areas need to be clarified? Are any further changes needed for issuers that prepare their financial statements using IFRS as issued by the IASB?

This is clear.

61. Under the proposed rules, an IFRS issuer or foreign private issuer may file financial statements of an entity under Rule 3-05, 3-09 or 3-14 prepared in accordance with IFRS as issued by the IASB even though the entity does not meet the definition of IFRS issuer. Should we also accept financial statements required under Rule 3-05, 3-09 or 3-14 prepared in accordance with IFRS as issued by the IASB without regard to the status of the issuer as an IFRS issuer or foreign private issuer? Should our acceptance depend on characteristics of the entity whose financial statements are being provided, such as that the entity already prepares IFRS financial statements or the entity principally operates outside the United States?

No comment.

62. Are there other rules in Regulation S-X that should be specifically amended to accommodate our proposal? If so, how would the application of those rules be unclear if there were no changes to those rules, and what changes would be suggested in order to make them clear?

No recommendations.

63. Should an IFRS issuer be required to continue to comply with the disclosure requirements of FAS 69? What alternatives may be available to elicit the same or substantially the same disclosure? Proposed Rule 13- 03(d) of Regulation S-X is modeled on an instruction relating to FAS 69 in Item 18 of Form 20-F. Does this proposed rule need to be modified in any way to more clearly require filers to provide information required by FAS 69?

No comment.

64. Is the guidance in this proposal sufficient to avoid any ambiguity about the use of IFRS financial statements in exempt offerings? If not, what additional clarification is needed? Is any revision to forms or rules necessary?

It seems sufficient.

65. Are there other rules or forms under the Securities Act or the Exchange Act that should be specifically amended to permit the filing of financial statements prepared in accordance with IFRS as issued by the IASB? If so, how would the rules or forms be unclear if there were no changes to those forms, and what changes would be suggested in order to make them clear?

No.

66. Are there other considerations in addition to those discussed in this release that the Commission should consider as part of the proposed amendments to permit the limited use of IFRS or its future decision regarding the use of IFRS by U.S. issuers?

No.

67. Do you agree with our assessment of the costs and benefits as discussed in this section? Are there costs or benefits that we have not considered? Are you aware of data and/or estimation techniques for attempting to quantify these costs and/or benefits? If so, what are they and how might the information be obtained?

See main letter. I believe the costs are extremely difficult or impossible to estimate but significantly greater than your assessment, for reasons stated therein. I am concerned that either LIFO conformity must be resolved, perhaps as stated in the cover letter, or its significant cash tax costs must also be included in this assessment.

68. We solicit comment on whether the proposed rules would impose a burden on competition or whether they would promote efficiency, competition and capital formation. For example, would the proposals have an adverse effect on competition that is neither necessary nor appropriate in furtherance of the purposes of the Exchange Act?

See main letter. I believe the ongoing dual reporting implicit in the Roadmap is burdensome and unnecessary.

69. Would the proposals create an adverse competitive effect on U.S. issuers that are not in a position to rely on the alternative or on foreign private issuers that do not report in IFRS?

Not to the best of my knowledge.

70. Would the proposed amendments, if adopted, promote efficiency, competition and capital formation?

See main letter.