CPA Australia strongly supports the AASB's decision to have the same requirements as in the International Financial Reporting Standards (IFRS) in respect of for-profit entities.... CPA Australia considers that in order for for-profit entities to obtain the full benefits of the Australian adoption of IFRSs, it is important that the same requirements as IFRSs are in the AIFRSs. Some of our members have expressed to us their concern that some of the options within IFRSs do not result in the highest quality financial reporting. We understand their concerns. However, following our analysis of all the options within IFRSs we do not think that any of those options require the AASB when acting in accordance with section 227 of the Australian Securities and Investment Commission Act 2001 to temper the operation of the Financial Reporting Council's directive to the AASB as it relates to for-profit entities – "...the accounting standards applicable to reporting entities under the Act will be the standards issued by the International Accounting Standards Board...".

• Listed companies. All listed companies will be required to prepare their annual financial statements under K-IFRSs beginning in 2011. Listed companies other than financial institutions will be permitted to do so beginning in 2009. Until adopting K-IFRSs, listed companies will continue to use current Korean Accounting Standards.
• Unlisted companies. Unlisted companies will be allowed to use 'simplified accounting procedures' that KASB will adopt by 2011 but may elect to issue K-IFRS financial statements. Until KASB's simplified standards are in place, unlisted companies will continue to use their current Koeran Accounting Standards.
• Consolidation. Currently, Korean companies both listed and unlisted are required to prepare separate company financial statements as their primary published financial statements. In addition they submit consolidated financial statements to the government, and consolidation is based on greater than 30% ownership. Under IFRSs, where there is a parent-subsidiary relationship, consolidated financial statements are required as the primary statements, with consolidation on the basis of control (generally greater than 50% ownership).
• Interim reports. While all listed companies must prepare quarterly and semiannual financial statements, those with assets below KRW2 trillion (about US$2.2 billion) will not be required to prepare interim statements on a consolidated basis until 2013. All must disclose non-financial items quarterly and semiannually on a consolidated basis.

Despite the recommendation in your report, and in the Schumer-Bloomberg study, that Congress amend the Sarbanes-Oxley Act, I want to state clearly this morning that I disagree. While of course it's up to the Congress to determine its legislative priorities, both the House and the Senate have formally asked my advice on this point, in hearings on the subject of Sarbanes-Oxley, and I have repeatedly given it. We don't need to change the law, we need to change the way the law is implemented. It is the implementation of the law that has caused the excessive burden, not the law itself. That's an important distinction. I don't believe these important investor protections, which are even now only a few years old, should be opened up for amendment, or that they need to be.

The SEC has the power and the necessary flexibility to implement the law in a way that makes sense for investors and markets. And your input is a valuable tool in helping us make those changes so that Section 404 operates as intended. In particular, we've been able to phase in the application of the internal controls requirements of Section 404, with appropriate deferrals for public companies of different sizes – so that even today, nearly five years after the Act, smaller public companies are not yet required to comply with this provision.

Continued Convergence – Accounting

The Commission supports and encourages the efforts currently underway by the IASB and the U.S. FASB to converge IFRS and U.S. GAAP. Recognizing that IFRS are principles-based standards, the Commission recommends that foreign regulators give full consideration to the positions of their international counterparts regarding application and enforcement of IFRS, and seriously endeavor to avoid conflicting conclusions, such as the divergent standards applicable to derivatives.

At the same time, the Commission acknowledges and respects the authority of IFRS countries to sort out amongst themselves the agreeable method for interpreting IFRS principles. The SEC should not involve itself unnecessarily in this process. In this regard, the Commission applauds recent public statements by the SEC director of Corporate Finance that the SEC does not intend to become the arbiter of IFRS, and encourages the SEC to apply faithfully IFRIC interpretations of IFRS and to defer to home-country regulators where appropriate in reviewing financial statements filed by foreign private issuers under IFRS.

In addition, the Commission would further encourage the SEC to continue and redouble its efforts to work within the IOSCO toward the convergence of international disclosure standards, particularly with respect to financial disclosure. Modifying home-country disclosure to comply with similar but different SEC standards merely adds costs for foreign private issuers.

Continued Convergence – Auditing

The Commission also recommends that the SEC and PCAOB work with their international counterparts and the IAASB toward global convergence of U.S. and international auditing standards. The Commission strongly believes that it is imperative that international convergence of accounting standards be accompanied by convergence of audit standards.

The Commission believes that U.S. and international regulators and standards-setting bodies should accomplish accounting and auditing convergence within five years.

Elimination of the Reconciliation Requirement

The Commission also recommends that the SEC immediately consider an alternative approach for eliminating the reconciliation requirement. Specifically, the Commission proposes that the SEC establish a process by which it could, on a case-by-case basis, determine that a foreign country's accounting standards are sufficiently equivalent to U.S. GAAP that foreign companies from that jurisdiction would not be required to reconcile their financial statements to U.S. GAAP for SEC financial reporting purposes. The foreign country would be required to provide reciprocity for U.S. companies. As a potential model, the Commission suggests consideration of an approach similar to that set forth above in the subsection 'Substituted Compliance – Foreign Brokers and Exchanges'.

• CA, JP, US work plans. The work plans and timetables of the Canadian, Japanese, and US accounting standard setters toward convergence with IFRSs. CESR did not evaluate the progress toward convergence but, rather, collected information "available from public sources".

• Equivalence definition. A recommended definition of equivalence. CESR concludes that "he criteria for deciding equivalence should be that investors should be able to make a similar decision irrespective of whether they are provided with financial statements based on IFRSs or on third country [non-EU] GAAP". However, CESR notes that the definition is only one part of the framework for assessing equivalence. Equivalence also requires reliable (a) "filters at country levels for ensuring market confidence", (b) audit assurance, and (c) enforcement to ensure that the non-EU GAAPs are applied and complied with properly.
• Use of 'third country' GAAPs. A summary of which third country (non-EU) GAAPs are currently used in the EU regulated markets. CESR found that at least 33 different non-EU national GAAPs are used on EU regulated exchanges. Click for Table Derived from CESR Report (PDF 17k). CESR also identified around 130 non-EU issuers using Member States' GAAPs, such as UK GAAP. CESR did not find any legal requirements in EU Member States to reconcile non-EU GAAPs with IFRSs.