Subject: File No. S7-13-07
From: Steven Balsam, Ph.D., C.P.A.
Affiliation: Professor of Accounting, Fox School of Business, Temple University

August 19, 2007

Currently the SEC has proposed (see release nos. 33-8818 34-55998) allowing foreign registrants to using IFRS to omit the reconciliation to U.S. GAAP on their 20-F. There are problems with even this limited choice, as it would lessen the comparability of those financial statements to those of domestic companies that file using GAAP and increase the costs of users of those financial statements who would have to learn IFRS. There are differences between GAAP and IFRS - for example with respect to Research Development Costs GAAP under SFAS No. 2 generally requires all RD be expensed, while under IFRS development costs are capitalized as intangible assets if the criteria set forth in IAS No. 38 are met. One might recall several years ago (1993 to be precise) when Daimler-Benz first listed on the New York Stock Exchange, it reported income of $102 million for the first half of the year under German (not IFRS) accounting standards, but in its 20-F reported a loss of $579 million under U.S. GAAP. While this discrepancy may not be representative, it is unlikely the cost of the current reconciliation is so great that it has driven foreign issuers away from the U.S. markets.