30 November 2009
Mr. Gerrit Zalm
Chairman
Trustees of the IASC Foundation
30 Cannon StreetLondon EC4M 6XH
United Kingdom
Dear Mr. Zalm:

re: Comments on“Proposals for Enhanced Public Accountability”
The Corporate Accounting Committee (CAC) of the Securities Analysts Association ofJapan (SAAJ) is pleased to comment on “Proposals for Enhanced Public Accountability”(the Proposal), put out by the trustees of the IASC Foundation (the trustees) as Part 2 ofConstitution Review. The SAAJ is a not-for-profit organization providing investment
education and examination programs for securities analysts. Its certified members
exceed 23,000. The CAC is a standing committee of the SAAJ composed of 14 members,
most of whom are users including equity and credit analysts, and portfolio managers,
while a few others are academicians and public accountants.

General remarks
The CAC applauds the extensive efforts of the trustees in reviewing the constitution
which yielded material proposals regarding a variety of subjects. As IFRS are being
adopted all over the world, the trustees’ initiative in developing official relationships
with regulatory authorities through establishment of the Monitoring Board, and also inbuilding an accounting standard base useful for making investment decisions byincreasing the proportion of user representatives among IASB and SAC members,
should be highly evaluated.
The CAC expects the Monitoring Board to be able to block political pressure on theIASB and thus protect its independence. In this regard, the CAC regrets that the EC is
not yet a member of the Monitoring Board but hopes it will be soon, thus enhancing
legitimacy of the Board.
The CAC takes very seriously the IASB’s policy of emphasizing investor opinions in thestandard-setting process. The SAAJ has 23,000 members who earned their designationas certified members (CMAs) after rigorous education and examinations. They work forvarious financial institutions including securities companies, banks, insurance1companies, and investment companies. The number who work for non-financial
companies as IR, accounting, or planning officers, and also as accountants andconsultants is also increasing. The SAAJ surveys the opinions of its diversified
membership through opinion polls and submits opinion letters to the IASB following
deliberations by the CAC. In the recently issued new accounting standards regarding
the classification and measurement of financial instruments by the IASB, some things
have been revised in accordance with proposals in CAC’s comment letter. The CAC
greatly appreciates the IASB’s willingness to listen to public opinion and to reflect suchin the standards. However, in the CAC’s view, IASB’s initial proposals are often too
radical. The CAC is afraid this is because the IASB is influenced by the views of alimited number of radical analysts. Analyst opinions are diversified with certaingeographical biases. In reflecting analyst opinions, this should obviously be taken intoaccount. The IASB should propose initial drafts based on well-balanced judgments, notinfluenced by prejudiced opinions.
Lastly, the CAC wants to comment on funding of the IASCF, although this is not an
issue in reviewing the constitution. The CAC has learned with regret that thecontribution from US financial institutions shrank dramatically with the onset of thefinancial crisis and that many countries have yet to pay their dues. Sound funding iselementary for sound development and adoption of the IFRS. Overdependence on aparticular industry in a particular country is not good. A situation where there are too
many free riders is not good either. The CAC asks the trustees to continue their efforts
to secure stable funding based on diversified sources.
Following are comments on specific questions raised in the Proposal.

Question 1

Change name to ‘IASB Foundation’

In conclusion, most CAC members are against changing the name. IASB is awell-established brand name and there is no need to change it especially since it would
cost. Apart from cost, the CAC thinks “IASB” is a better name than the proposed ‘IFRSBoard’. International Financial Reporting Standards, or IFRS, are only a set ofaccounting standards. In comparing ‘accounting standards’ to ‘financial reportingstandards’, we feel the former have the connotation that they are backed by strong
academic theory while the latter lacks such nuance. Robust and reliable standards need
to be endorsed by systematic theory. In this regard, the CAC thinks “IASB”, whichcontains the words “accounting standards”, should be preserved.
‘IASC Foundation’ or ‘IASCF’ is misleading, the acronym being borrowed from its
predecessor. The CAC, therefore, makes a counter proposal to change this to ‘IASB2

Foundation’ or ‘IASBF’.

Question 2Replace ‘accounting standards’ with ‘financial reporting standards’

The CAC is against this proposal for the same reasons mentioned above.1
In relation to “accounting standards” theory, currently there are no accounting
scholars on the IASB (previously there were two) and only one on the SAC either (until
last year there were four). The CAC is concerned about this in terms of proposing
standards backed by objective theory. The CAC welcomes the greater representation ofusers, but this does not justify not having any academicians on the board. Lack ofacademicians with broad views and sound common sense may be a reason why IASB
proposals are sometimes too radical and seem to lack theoretical consistency. The CAC
expects the current imbalance will be rectified shortly and that IASB and SAC
composition will become better balanced.

Question 11

Shorter due process (fast track)

The “30 days accelerated due process period” stipulated in the Due Process Handbook
is a really necessary minimum period for an organization which has to translate anexposure draft into Japanese, confirm the opinions of 23,000 members, draft a comment
letter in Japanese, and then translate it back to English for submission. However,recalling what has happened in the past year, we have to perhaps expect unexpected
incidents in the future. Therefore, the CAC is not categorically against fast track butthinks the proposal flawed. The Proposal stipulates IASB shall “reduce, but noteliminate, the period of public comment”. Technically, the reduced period could be oneday. For countries where English is not the mother tongue, one week is practically thesame as one day considering the two-way translation required. The CAC proposes thefast-track period be at least two weeks.

Question 13

SAC

Looking at IASCF family organizations, the SAC has two prominent features. First is
the substantial number of members. Trustees number 22, and IASB and IFRIC
members 14 each. The minimum number of SAC members is stipulated at 30, but thecurrent number of members exceeds 45. The second feature is that its objectives arerather vague. Trustees raise funds and make appointments. The IASB draws up IFRSThe Proposal lists five places where ‘accounting standards’ are used and proposes toreplace all with ‘financial reporting standards’ (page 10). It should be noted that inAnnotated Constitution, no replacement is made for Article 6 (page 29).

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while IFRIC writes interpretations. The constitution says SAC’s objectives are “givingadvice” and “informing” the IASB or the Trustees, but does not refer to concrete visible
output. In order for the SAC to function better, the two features should be madeadvantages rather than disadvantages. After the SAC’s reconstitution this year,members were explicitly told that their personal opinions were not wanted but rather
the views of their constituents. To this end, members have already told theirconstituents of IASB developments to obtain a consensus view. By endorsing suchactivity, SAC members will intermediate communications between the IASB and SAC
member constituents. The Proposal makes no amendments in regard to the SAC, but
the CAC proposes adding a new paragraph, (d), to Article 45 (Annotated, page 48) whichreads “informing its constituents how IFRS are being developed”. The CAC believes thiswill further vitalize and strengthen the SAC.

If you have any questions or need further elaboration, please do not hesitate tocontact Sei-Ichi Kaneko, Executive Vice President, SAAJ (s-kaneko@saa.or.jp).
Sincerely yours,Keiko Kitamura
ChairCorporate Accounting Committee4