Statement 154 is the result of a broader effort by the FASB to improve the comparability of cross-border financial reporting by working with the International Accounting Standards Board toward development of a single set of high-quality accounting standards. Michael Crooch, FASB Board member and Board collaborator on the project, said, "This is one example where the Board concluded that the IASB requirements result in better financial reporting. We were able to make a meaningful improvement in U.S. GAAP while converging with the IASB."

We generally agree with the proposed drafting of the "Day 1 gain or loss" disclosures to be included in IFRS 7 Financial Instruments: Disclosures. However, we believe an entity should be required to determine categories of instruments for which the "Day 1 gains or losses" issue is relevant (for example, derivative commodity contracts and structured financial products). A requirement to describe these categories should be inserted into IFRS 7.

This brings us to one of the greatest benefits of IFRS – that it should ultimately lower the cost of capital. First, because the internal costs of compliance – all the accounting systems necessary to maintain the same basic information according to different accounting standards – will be reduced. More of the company's productive capacity can be spent on being productive, rather than on compliance. Second, because investors, analysts, and regulators will have to know only one or two accounting languages, they should be able to price securities more efficiently. As they become familiar with the language of IFRS, and as more companies report using IFRS, users, especially analysts, will be able to compare companies from different countries directly, without making rough and ready adjustments.

We believe this equivalence project has made a valuable contribution to the shared understanding of both the common ground and the differences between the leading sets of GAAP and we are supportive of the concept of focusing on "real world outcomes of investor behavior" and efficient remedies that are targeted on what really matters to investors. However, we do have reservations about the role and capacity of the auditor in this regard, which we address in our detailed comments.