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U.S. Securities and Exchange Commission

Office of the Chief Accountant:
Letter from SEC Chief Accountant to Sir David Tweedie, Chairman, IASB re: IASB Agenda

July 20, 2001

Sir David Tweedie
International Accounting Standards Board
30 Cannon Street
London, EC4M 6XH
United Kingdom

Dear David:

The SEC Staff looks forward to participating as an observer to the International Accounting Standards Board Standards Advisory Committee. We look forward to working with the IASB in its efforts to establish high quality, transparent international accounting and financial disclosure standards.

The IASB has the opportunity to become a leader in the setting of standards that regulators, investors and others can rely upon. The determination of the initial agenda for the Board will be an initial step in establishing the Board as a leader. While some have proposed the Board take on a number of "easier" issues it can complete in a relatively short period of time, this fails to demonstrate the Board's capability to tackle some of the more difficult issues that are vitally important to the world's capital markets and investors today.

The staff encourages the Board to address the significant differences between international and U.S. GAAP standards as set forth in our earlier communications to you. This would eliminate many of the reconciling items for foreign companies who file with the U.S. However, it is important to keep in mind that development of international standards should not be a race towards a lowest common denominator or towards the standards of a particular country, but rather a race to the highest common denominator -- the establishment of standards that reflect in a transparent and consistent fashion, the underlying economics of the transactions being reported. High quality standards should also result in comparable accounting by companies for comparable transactions that is neutral and also verifiable. They should also avoid complexity that is all too often the result of compromises that do not provide transparency or investor protection.

The staff also believes that other projects can enhance the current standards of the Board. Some of the most important projects from our perspective would be business combinations, which would involve the elimination of the "pooling" alternative and the establishment of a rigorous impairment test that works by ensuring declines in value are reported in the periods they occur, a comprehensive revenue recognition standard that would provide investors adequate protection as this is the largest item in financial statements today, fair value accounting for all financial instruments, and an equity/liabilities project.

The initial agenda of the IASB will be a challenge from a number of perspectives. We hope that the IASB is able to work in close partnership with national standard setters and that they in turn provide the Board with cooperation and support it will undoubtedly find useful.

Once again, we look forward to your future success.


Lynn Turner
Chief Accountant


Modified: 07/27/2001