The FSA sent a comment letter regarding the consultation document ''CESR's technical advice on a mechanism for determining the equivalence of the generally accepted accounting principles of third countries''.
The FSA requests among others CESR to provide more clarity in some of the key terms used in the proposed mechanism:
- “significant difference” (paragraghs 16, 23): It is unclear how this undefined term relates to the same term used in CESR’s previous Technical Advice (CESR/05-230b), which, in case of Japanese GAAP, includes 26 items.
- “non-complex disclosure” (paragraghs 16, 19): It is equally unclear how this undefined term relates to the similar term used in the previous Advice - “remedy” - which includes: supplementary statements, disclosures A, and disclosures B.
- “material difference” (paragraph 18): The paragraph 18 seems to suggest that certain “significant differences” that do not amount to “material differences” may not require any additional disclosures. This appears inconsistent with paragraph 16, and is at any rate confusing because both of the key terms are used without any definitions.
For the purpose of responding to your consultation, we are assuming, barring further
clarifications, that “significant difference” and “non-complex disclosure” are to be used
synonymously, in respect to the two terms used in the previous Advice (CESR/05-230b).
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