Office of the Chief Accountant: Letter from SEC Chief Accountant to AICPA re: Effective Date Provisions of FASB Interpretation No. 46 With Regard to Foreign Private Issuers

Dear Messrs. Kueppers and Hartig:

This is in response to your letter dated March 9, 2004 on the effective date provisions of FASB Interpretation No. 46 (revised December 2003) (FIN 46-R), Consolidation of Variable Interest Entities, as they relate to foreign private issuers. We would not object to the effective dates of FIN 46-R for foreign private issuers as set forth in the Appendix to your letter.

We encourage all registrants, including foreign private issuers, to consider early adoption of the provisions of FIN 46-R and remind registrants to provide clear and precise disclosures pursuant to the provisions of FIN 46-R. Further, we remind registrants that the off-balance sheet arrangement disclosure requirements adopted by the Commission in FR-67 [Release No. 33-8182], Disclosure in Management's Discussion and Analysis about Off-Balance Sheet Arrangements and Aggregate Contractual Obligations, apply to all registrants, including foreign private issuers, in registration statements, annual reports and proxy or information statements that are required to include financial statements for fiscal years ending on or after June 15, 2003.

Sincerely,

AICPA

March 9, 2004

Dear Mr. Nicolaisen,

We are writing to confirm recent discussions between representatives of the AICPA International Practices Task Force (the Task Force) and the SEC staff with respect to the effective date of FASB Interpretation No. 46 (revised December 2003), Consolidation of Variable Interest Entities, an interpretation of ARB No. 51 (FIN 46-R).

The dates by which entities must implement FIN 46-R (as well as other standards and interpretations) vary depending on the entity's year-end and frequency of interim reporting. U.S. domestic companies that have public reporting requirements are required to prepare quarterly financial statements in addition to annual financial statements. Non-U.S. domiciled entities that are considered "foreign private issuers" under the SEC's rules and regulations are not required to file quarterly U.S. GAAP financial information. These entities may or may not prepare U.S. GAAP information on an interim basis. When such information is prepared, it may be for a semi-annual versus quarterly period.

In December 2003, the FASB issued FIN 46-R. As noted by Task Force representatives in discussions with the SEC staff, the effective date for certain foreign private issuers of FIN 46-R is earlier than that under the original FIN 46. In issuing FIN 46-R, the FASB staff has advised representatives of the Task Force that the intent was not to accelerate the application of either FIN 46 or FIN 46-R, but rather to provide for a deferral of FIN 46 and FIN 46-R in order to allow enterprises sufficient time to understand and implement the guidance. This is consistent with the discussion in paragraphs D62-D65 and paragraph E49 of FIN 46-R.

Consistent with the FASB's intent, it is our understanding that the SEC staff does not object to the conclusion that FIN 46-R should not be required to be applied at a date earlier than the original FIN 46 and that foreign private issuers would be required to apply FIN 46-R as set forth in the Appendix to this letter. The Appendix to this letter also provides disclosures that a foreign private issuer should provide relating to the adoption of FIN 46 or FIN 46-R.

Please confirm that the SEC staff would not object to the effective dates of FIN 46-R for foreign private issuers as set forth in the Appendix to this letter. If you have any questions regarding this request please feel free to contact either of us.

Sincerely,

Enterprises are permitted, but not required, to adopt FIN 46-R early. Enterprises with variable interests in variable interest entities created after January 31, 2003, are required to apply FIN 46 or FIN 46-R immediately. The following table summarizes the mandatory effective dates of FIN 46-R for enterprises with variable interests in variable interest entities created before February 1, 2003, given certain year-end and frequency of reporting assumptions:

With regard to disclosure, foreign private issuers will need to comply with the following disclosure requirements for all financial statements issued after December 31, 2003:

• Paragraph 27 of FIN 46-R; 
• SAB Topic 11.M (SAB 74);
  The off-balance sheet reporting requirements recently adopted by the Commission in FR-67, Disclosure in MD&A About Off-Balance Sheet Arrangements and Aggregate Contractual Obligations; and
• Those foreign private issuers that file under Item 17 of Form 20-F should consider SAB Topic 1.D.1 to determine if the potential impact of FIN 46 or FIN 46-R is of a significance level that disclosure should be made pursuant to Item 5 of Form 20-F.