Subject: File No. 265-24
From: Gilbert F. Viets

March 11, 2008

I have the following recommendations as you consider the draft report:

1. Your Audit Process and Compliance Committee should make a recommendation about a safe harbor for protecting the exercise of judgment. This important point should not simply be punted to the SEC and its staff without comment from very smart people. Im not very smart, but have a recommendation: NO SAFE HARBORS. Safe harbors produce horrible decisions by accountants and auditors. Natural safe harbors are provided by good professional work. Judges and juries support good work. Have courage.
2. Accounting principles should be based in conservatism. They were at one time. Return to Lower of Cost or Market for everything. Its easier and safe. Let the market decide market values, not pressured controllers and auditors. Use transaction based accounting, not wishful thinking and cheerleading. If I want to project optimism into the answers, Ill do it myself. As an investor, Id rather guess up on income and net worth, not be forced to discount fluff. Historical financial statements should not join in speculation.
3. Whoever sets accounting principles should be required to finally conclude on the troublesome issues of consolidation, lease, pension and stock option accounting. It is embarrassing how long we have studied and debated these issues, only compromising to wrong answers. Make the answers conservative, transparent and better.
4. Democracy is not a good way to set accounting standards. It is like lobbying and voting on how much a gallon of water weighs. Accountants and auditors should produce information we can believe and trust, not something resulting from rent-seeking activities.
5. Give management and Boards one more chance for proper use of stock options. Next failure, outlaw stock options and other stock based compensation. I suspect such compensation has encouraged more bad behavior than good.
6. Fix the following auditor problems:

a. Professional accounting firms are not properly governed or capitalized
b. Nor are they committed to proper professional standards
c. The public deserves financial and qualitative information about CPA firms
d. Independence is routinely compromised in audit work
e. CPA Firm ethics are diluted to the lowest level acceptable among organizations permitted to practice as part of CPA firms
f. Regulation today is rationalization among friends, and
g. PACs and lobbying have no place in this profession.

Do the right things. Do not worry about competitiveness of our financial markets. It will take care of itself. Our financial markets could be the envy of all, if our financial statements were right.

Thank you for permitting all of us to comment. I know you are all committed to proper goals, and I appreciate your hard work.