International Councils of Securities Associations
c/o Securities Industry Association, 120 Broadway, New York, NY, 10271

June 19, 2000

Jonathan G. Katz
U.S. Securities and Exchange Commission
450 Fifth Street, NW
Washington, D.C. 20549-0609

Re: File No. S7-04-00 -- International Accounting Standards

Dear Mr. Katz:

The International Councils of Securities Associations1 (ICSA) appreciates the opportunity to comment on the Securities and Exchange Commission's ("SEC") Concept Release on International Accounting Standards ("Release"). ICSA strongly supports the SEC, the International Accounting Standards Committee ("IASC") and the International Organization of Securities Commissions ("IOSCO") in their efforts to promote the development of a set of high quality international accounting standards.

ICSA has long worked toward the goal of achieving fair, liquid and efficient global capital markets by reducing barriers to the globalization of the capital markets and the securities industry. As part of this effort, ICSA looks to support, initiate and foster efforts which help standardize and facilitate documentation and operational infrastructure which supports the global marketplace. Indeed, ICSA members recently met at their Annual Meeting and in their final communiqué announced support for the efforts of both IOSCO and the IASC in developing and implementing harmonized accounting standards. Establishing such standards is critical if a truly efficient global capital market is to be developed.

Indeed, ICSA members also note and strongly support the IOSCO communiqué at its 25th Annual Meeting, which "approved a resolution recommending that IOSCO members permit the use of 30 IASC standards for such cross-border offerings and listings, as supplemented by reconciliation, disclosure and interpretation where necessary to address outstanding substantive issues at a national or regional level."2

As part of developing an efficient global capital market, ICSA members support measures that will facilitate the ability of issuers and investors to engage in cross-border business. We strongly believe that the development of quality international accounting standards is at the very core of facilitating international investing and ensuring that global investors receive high quality, transparent, and comparable information. By contrast, in today's global markets, investors face a patchwork quilt of accounting standards in contemplating investment in a foreign issuer, even in instances where the issuer reconciles its financial statements to the local standards.

Equally, when a domestic investor invests in a foreign company he or she is still necessarily subject to the prevailing accounting practices in the issuer's home country. Clearly, a single set of high quality standards will reduce the burden imposed on international issuers and investors.

ICSA believes that broad recognition of IASC standards by the SEC, the primary regulator of the world's largest capital market, would provide a very strong inducement for other jurisdictions to adopt the IASC standards, and could be the single most important step in improving global accounting standards.

ICSA members believe that the IASC core standards provide a sufficiently comprehensive and high-level accounting framework to serve as a common international standard. In many jurisdictions adoption of IASC standards will substantially raise accounting practices, as they require high quality, transparent reporting. ICSA members acknowledge that given past limited use and experience with IASC standards there should be an evaluation period prior to full acceptance without reconciliation. We are of the view, however, that if the Commission believes that the standards need to be supplemented, a relatively modest discussion of certain key differences would suffice to provide analysts and investors with the ability to discern the primary differences between IASC and GAAP accounting conventions.

Most importantly, the imposition of any additional requirements must be done in a way which avoids both undercutting the attractiveness of the IASC standards to other jurisdictions and imposing an excessive burden upon foreign issuers. While we recognize that IASC standards differ from U.S. GAAP, this does not necessarily imply a lower quality in the standard of reporting. An attempt to insist upon applying every aspect of U.S. GAAP runs the risk that other jurisdictions will incorrectly interpret that as hostility on the part of the SEC to international accounting.

Given ICSA's view of the desirability of a set of international accounting standards, we believe it is critical that a body be developed with the objective of international standard setting and that those standards should be enforced. In this regard, we note that the IASC Nominating Committee recently announced the appointment of 19 individuals to serve as trustees for the restructured IASC.3 ICSA members believe this is an essential first step in the process to ensure market integrity by setting and enforcing high-quality standards.

Very truly yours,
David G. Strongin
ICSA Secretariat

The members of ICSA are as follows:

Association Francaise des Entreprises d'Investissement, France
The Bond Market Association, United States
Italian Association of Financial Intermediaries, Italy
Chinese Securities Association, Taiwan
International Banks and Securities Association of Australia, Australia
International Primary Market Association, International (based in London)
International Securities Market Association, International (based in Switzerland)
Investment Dealers Association of Canada, Canada
Japan Securities Dealers Association, Japan
The Korea Securities Dealers Association, Korea
London Investment Banking Association, England
National Association of Securities Dealers, Inc., United States
*Securities Industry Association, United States
Swedish Securities Dealers Association, Sweden

*ICSA Secretariat

G:\Users\RSCH\SHARED\Sheila\INTL\ICSA\2000annual meeting\ICSA ACCTG LETR.doc

1 The objectives of the International Councils of Securities Associations are: to aid and encourage the sound growth of the international securities markets, by promoting and encouraging harmonization in the procedures and regulation of those markets thereby facilitating international securities transactions, and by promoting mutual understanding and the sharing and exchange of information among the members of the Councils. ICSA is comprised of securities industry self-regulatory organizations and trade associations from eleven countries. ICSA members represent the overwhelming majority of the world equity, bond, and derivatives markets. A list of ICSA members is attached an exhibit to this letter.
2 Final Communiqué of the 25th Annual Conference of the International Organizations of Securities Commissions, Sydney, Australia, May 14 - 19, 2000.
3 SEC Press Release, IASC Nominating Committee Announces Trustees, May 22, 2000.