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September 08, 2008


Joe Jefferis

Four of sixteen seats with the possibility the not all four are American (experts in capitalism), sounds like a stacked deck against American principles. We should not encourage regulatory adjustments to accomodate the less sophisticated financial systems.

FASB should continue and we should watch as the ISAB continue their slow movement toward GAAP. When ISAB needs guidance on their issues (current mark to market debacle), they refer to GAAP and FASB for clarification or ideas.

We should celebrate our differences and not strive to achieve universally accepted monothought. We should not surrender our sovereignty to the throne of globalism.

Who is the real benefactor from going down this IFRS road? The obvious answer is the global audit firms. It enhances their future revenues streams at the expense of the equity stakeholders. It also gives them additional interpretive authority to determine who wins and who loses. We will not know the impact of adopting IFRS until after we adopt it. Will it make the energy sector more profitable and the retail sector less profitable?

Let us not concede our leadership role. If one thing is clear from this current economic crisis, America's economy directly impacts the rest the world's economies. With our soldiers fighting in two wars, economic uncertainty, and the largest transfer of wealth all ocurring in America right now, let's shelve this idea for a generation or two.

Steven E. Shamrock

I believe a FASB-like body will need to continue. Despite being a set of international standards, there are different IFRS versions in many countries. While this may stem from legacies of rules that are embeded in tax codes and government regulations (think LIFO), it cannot be denied that each economy has its own dominant sector. This means that a change in standards will affect the financial statements, and thus market value of capital, differently in each country. So until the underlying reason for IFRS is achieved, that is, to have one set of rules that provides transparency, and respective economies change to achieve success under the new "yard stick", there will need to be local bodies that are verse in the importance of certain financial elements to an economy. These differences can then be ironed out over time with minimal damage to the economy, and reduce resistance. On the respresentataion, I think it should be based on relative GDP.

Steven E, Shamrock, St. Louis, MO

Rich Jones

Fred, I would argue that, post IFRS convergence, the FASB or a similar private sector accounting standard-setting organization will be needed for several years. Their role would be as an interpreter of IFRS guidance and, similar to the ASB with respect to IAASB standards, they will deliberate on new IFRS and help determine how those standards might have to be modified for adoption in the U.S.

Additionally, I would like the FASB to maintain and update its codification, particularly for implementation of IFRS.

Lastly, we should keep in mind that the IASBs and IFRSs have only really been around since 2000. Much of the guidance issued by its predecessor, the IASC, has been revised or eliminated. Thus, the IASB/IFRS guidance is not particularly detailed. The implementation guidance seems to be left to the jurisdictional accounting standard-setting bodies. Such an approach is consistent with the IFRS hierarchy, which recognizes the guidance provided by standard-setting bodies with a comparable framework. Certainly, after some acceptable period of adoption, say 10 years, we might find that the role of the FASB will have diminished significantly, particularly with the maturing of the IASB. At that point, the FASB's role might change significantly, or it might be determined that its cost exceeds its benefit.

Emil Jayaputra

Hi Fred, I also think that the FASB (or any other national standard board) should continue to exist. As you have pointed out, the IFRS may not be enforceable and/or suitable to private and not-for-profit companies or even SMEs. Furthermore, with no local accounting standard setter around it is hard to envisage a proper representation of national interests (that is very dynamic in nature) in future developments of the IFRS. (EJ)

Donald Ewick

Fred, your point on the existence of other national standard setting bodies who vet individual IASB standards is important. There is a distinction between IFRS “as issued” and “as adopted”. Current USGAAP implies a fairness where everyone is playing by the same "rules". Use of IFRS "as adopted by the European Union", for example, implies that differences continue to exist even within IFRS principles.

If the US adopts IFRS as issued by the IASB, then it may be in the minority in the Group of Eight (G8) countries. The US would be placing more importance on IASB-issued standards than most of its peers. Therefore, IASB representation would be far more important to the US than others. The ability to follow IFRS as adopted by the FASB or a similar body (adopted by the FASB or the SEC could be a topic for another posting) would provide US representatives with a flexible option “to agree to disagree” within the IASB. To ultimately achieve a robust set of IFRS, there must be some politicking along the way, regardless of how uncomfortable an independent and objective-minded accountant may be with that.

The FASB or a similar body is important to help smooth the road to the work-in-progress that is IFRS.

Linda Cavanaugh

I agree with your comments. I also envisioned the FASB becoming a part of the IASB. The US constituents have a lot of knowledge and experience, represent a fairly large part of the global economy and should be included in the IASB decision making process. However, with 4 seats for North America, it is possible that not all the seats will be filled by the United States. I am sure Canada and possibly Mexico would also like to be represented on the Board.

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