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Department's Response to the Securities and Exchange Commission's Work Plan on Incorporating International Financial Reporting Standards into the U.S. Financial Reporting System 

July 29, 2011

Mr. James L. Kroeker
Chief Accountant
Office of the Chief Accountant
U.S. Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549

Re: File No. 4-600

By email

Dear Mr. Kroeker:

The New York State Banking Department has reviewed the Securities and Exchange Commission’s "Work Plan for the Consideration of Incorporating International Financial Reporting Standards into the Financial Reporting System for U.S. Issuers -- Exploring a Possible Method of Incorporation," and we appreciate the opportunity to provide our thoughts.  We regulate not only U.S. banking organizations and non-bank lenders, but also the U.S. branches and agencies of foreign banking organizations whose home country financial statements may be prepared in accordance with International Financial Reporting Standards (“IFRS”).  Consequently, we make extensive use of financial statements of banks and their holding companies, and we would be directly affected by any decision of the Securities and Exchange Commission (“SEC”) to allow U.S. issuers to prepare their financial statements in accordance with IFRS.  

We continue to support the goal of high-quality, globally accepted accounting standards.  To this end, we believe the International Accounting Standards Board ("IASB") and the Financial Accounting Standards Board ("FASB") should be given every possible opportunity to substantially converge their standards.  This effort is more important than following a predetermined timetable.  Arguments that the U.S. will be "left behind" on IFRS or "left out" of the IASB suggest tactics unrelated to the merits of IFRS.  If the IASB shuts the FASB, SEC, or other American representation out of the global standard-setting process, the SEC will have to reconsider U.S. involvement with IFRS. 

The details of the Work Plan suggest that the SEC may consider a single global standard -- i.e., "IFRS as issued by the IASB" -- no longer possible.  This casts doubt on a cornerstone argument of global convergence, namely comparability of financial results between institutions around the world.  The SEC may also be concerned with its ability to exert influence if it agrees to follow IFRS as issued.  While this represents a valid concern, it should not be a driving factor in whether to intervene in accounting standards following issuance by the IASB.

If the SEC determines that substantial convergence between IFRS and U.S. generally accepted accounting principles ("GAAP") is not achievable, then we believe that an approach that moves U.S. GAAP closer to IFRS is preferable to retaining the content of current U.S. GAAP.  This will minimize the extent to which financial statement preparers and users in the U.S. must be knowledgeable about two different accounting regimes.  If complete convergence is not possible, the Work Plan's approach should be strongly considered.  The proposed "Condorsement" approach has substantial merit, and we have comments on certain relevant elements:

If you would like to discuss our letter, please call me at (212) 709-1532 or email me at

Very truly yours,

John McEnerney
Chief of Regulatory Accounting

Department of Financial Services


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