Comments on the Securities and Exchange Commission's proposed IFRS roadmap.

• Position: International Financial Reporting Standards

April 20, 2009

On April 20, 2009, Tax Executives Institute submitted the following comments to the Securities and Exchange Commission on its proposed "roadmap" for the potential use of financial statements prepared in accordance with International Financial Reporting Standards. TEI's comments were prepared under the aegis of its Financial Reporting Committee, whose chair is Terilea J. Wielenga of Allergan, Inc. The following members contributed to the preparation of TEI's comments: Victor Ledesma, Kimberly-Clark Corporation; Janice L. Lucchesi, Akzo Nobel Inc.; Nanci S. Palmintere, Intel Corporation; Donald J. Rath, Synposys, Inc.; and Janet M. Rudnicki, Halliburton Company. Eli J. Dicker, TEI's Chief Tax Counsel, serves as legal staff liaison to the committee.

Tax Executives Institute is pleased to submit comments on ,the proposed Roadmap ('Roadmap') for the potential use of financial statements prepared in accordance with International Financial Reporting Standards ("IFRS") issued on November 18, 2008, by the Securities and Exchange Commission ("SEC" or "Commission").

TEI applauds the SEC for issuing the Roadmap and welcomes the opportunity to provide our views. We support the broad goal of using a single set of high-quality accounting standards for financial reporting purposes. Among other things, a single set of standards will enhance the ability of users of financial information, e.g., investors, regulators, and other interested parties, to compare financial information of U.S. companies with that of non-U.S, companies. Moreover, a single set of standards will temper the compliance reporting burdens of financial statement issuers. TEI generally supports the goal of adopting IFRS, a single body of financial reporting standards, to promote consistency in financial reporting. Our evaluation of the Roadmap suggests, however, that several areas would benefit from greater focus and analysis.

Summary of Recommendations

TEI principal recommendations are, as follows:

First, "tax authority readiness," specifically, the ability of the Internal Revenue Service and state taxing authorities to cope with the conversion, must be established as an independent milestone. Given the historical linkage between financial information prepared in accordance with U.S. GAAP and the calculation of U.S. federal tax income, it is essential that the taxing authorities charged with developing and implementing transitions from U.S. GAAP to IFRS be central players in this process. Second, the timetable currently proposed to adopt (2011) and implement mandatory IFRS reporting (2014) is unrealistic because it underestimates the time required to ensure taxing authority, taxpayer, and systems readiness. A more reasonable implementation date is 2016.

Background

Tax Executives Institute was founded in 1944 to serve the professional needs of in-house tax professionals. Today, the organization has 54 chapters in North America, Europe, and Asia, with the majority of our members working for companies resident in the United States. As the preeminent global organization of corporate tax professionals, TEI has a significant interest in promoting sound tax and regulatory policy, as well as in the fair and efficient administration of the tax laws. Our 7,000 members represent approximately 3,200 of the largest companies in the world.

TEI members are accountants, lawyers, and other employees who are responsible for the tax and financial reporting, compliance, and planning affairs of their employers in executive, administrative, and managerial capacities. Tax professionals deal with accounting principles in two significant ways. First, accounting standards promulgated by the Financial Accounting Standards Board undergird the books and records that serve as the starting point for tax compliance in the United States. Second, tax executives typically are responsible (alone or in conjunction with other corporate departments) for the implementation of the specific rules for accounting for income taxes that form a part of the financial statements and required disclosures.

Question 1 :

SINGLE ACCOUNTING STANDARD

Do commenters agree that U.S. investors, U.S. issuers, and U.S. markets would benefit from the development and use of a single set of globally accepted accounting standards? Why or why not? What are commenters' views on the potential for IFRS as issued by the IASB [International Accounting Standards Board] as the single set of globally accepted accounting standards?

The development and use of a single set of accounting standards is the natural outgrowth of globalization and would be beneficial in the long term. The enhanced consistency that IFRS would occasion would benefit investors both inside and outside the United States, and taken on its own would likely make the U.S. capital market more attractive to foreign investors. That more than 100 countries have already adopted IFRS makes IFRS the logical choice.

The move toward a single set of accounting rules implicates the rights and responsibilities of many stakeholders beyond investors and issuers, including tax authorities, regulators...