We had a miserable meeting of our Baltimore Chapter last week. They served Crow Soup, Baked Crow and Crow a la mode. I ate it all. Every last bite. After my presentation on various finance issues that face the profession, one kind member asked "Who's going to win the Super Bowl?" I responded with the great quote from Vince Lombardi, "Show me a good loser and I'll show you a loser!"

This edition of FEI Express is sponsored by Comshare. Comshare, the leader in e-business solutions for management planning and control, brings you a free Webcast, "Financial Consolidation: How to Close Your Books At the Speed of Business." Hear about innovations in Web-based consolidation software from a panel of industry experts on February 15 at 11:00 am. To register, visit Comshare.

Here's what is happening around FEI.

SEC Issues Frequently Asked Questions About Auditor Independence
Last week, the SEC clarified some of the new rules on auditor independence. The full Q&A can be accessed at the following link: http://www.sec.gov/offices/account/audinfaq.htm. Some of the highlights include the fact that the disclosures of audit fees include any work done on the quarterly reviews during the year. The accountants' out-of-pocket costs should be included in the audit fee disclosure. The fees should be disclosed on an accrual basis for the applicable year, not a cash or billed basis - DUH! Comparative year disclosure is NOT required.

New Research Report: Leverage Competencies - The Key to Financial Leadership Success
Our Research Foundation is about to release an interesting new study that examines the challenges financial professionals face in developing non-traditional skills to take them to the top of their profession. Eight companies describe how they work with their finance staff to focus less on "command and control" and more on becoming strategic business partners.

Their approaches fall into two basic camps. The first stresses experiential learning, hiring individuals with backgrounds in sports or the military, because it finds that these candidates have the qualities to be team players and future leaders. Other take a more systematic approach, stressing internal support systems such as leadership centers, special courses and mentoring programs. In all cases, corporate culture plays a big role in defining training initiatives. The challenge to all efforts is making financial managers and employees understand that developing "soft skills" such as strategic thinking, innovation and managing risk is crucial to achieving corporate and individual success. The study is available at the Foundation website. Just a reminder: donors of $250 or more to the non-profit Foundation receive complimentary copies of all Research Foundation studies.

Letter to Audit Committee Chairs from Arthur Levitt
Chairman Levitt recently sent a letter to the audit committee chairmen of the largest 5,000 public companies. In it, Chairman Levitt summarizes the some of the key proposals of the recent O'Malley panel on audit effectiveness. The letter is quite controversial, because these proposals have not been put through the SEC's or AIPCA's due process procedures. Most IMPORTANTLY, they do not yet represent actual rulemaking. However, the weight and unprecedented nature of a letter from the SEC Chairman might imply otherwise. Some describe his letter as aspirational, not regulatory. That's an important distinction for FEI members to recognize upon receipt of the letter. Here is a link to the letter for your measured consideration: http://www.sec.gov/news/digests/01-05.txt.

Financial Analysis Webcast
On Feb. 2 at 12 EST, we will hold the first of what I hope is many live webcasts, which will include a demonstration of an Excel model that you may find useful. Pre-register at: http://www.financialexecutives.org/teleconf/upcoming_signup.cfm We will all log onto a designated website and Bruce Valentine, CFO of McStain, and I will discuss and demonstrate a share buyback model that Bruce developed over many years. He is an incredible Excel modeler, having previously designed the M&A model that is one of the most popular (and free) offerings in our download library.

Brought to you by the FEI Research Foundation, this model will be available on our web site shortly after the call. The audio portion of the meeting (through traditional teleconferencing) will be fairly informal, with Bruce and I reviewing the model then opening up the lines for your questions and thoughts. But I would really like this to be the start of many collaborative discussions, in which FEI members think through interesting topics. I sincerely hope you join us. After registering, we will e-mail you instructions. There is a small applet you need to install to be able to view the session live on the web.

FEI Assesses Corporate Tax Shelter Legislation
The February meeting of FEI's Committee on Taxation will examine the arguments that tax shelters enabled America's largest corporations to avoid federal income taxes. This issue gained some prominence in the closing months of the last Congress, although FEI's Hill contacts say that this subject is on the back burner for the time being. Since FEI will be working very hard to ensure that the long-awaited tax cut package includes corporate/business tax reforms, we must not allow the issue of abusive tax shelters to derail that effort.

The current tax shelter initiatives can be traced to hearings in April 1999 and a massive Treasury Report on Tax Shelters in July 1999. Former Assistant Secretary for Tax Policy John Talisman testified in November 1999 that "a comprehensive approach" was needed to address a growing disparity between tax and book measures of incomes, and growth in the number and diversity of tax avoidance devices that lacked economic substance. Former Secretary Lawrence Summers announced that abusive tax shelters posed a "threat" to the tax system and would be aggressively pursued by the IRS.

Then, in October 2000, Robert McIntyre of the Institute for Taxation and Economic Policy issued a controversial report alleging that many of America's largest 250 companies paid little or no corporate taxes, and that corporate tax breaks resulted in an aggregate 38% loss in tax revenues during the period 1996-1998. The ITEP report argued that the AMT was a "shell of its former self" and needed to be reinvigorated. Accelerated depreciation, the R&D and oil drilling credits and stock-option deductions were all cited as "culprits" in declining corporate tax revenues.

To address the perceptions that corporate tax avoidance and corporate tax shelters were a "growing problem," Senators Roth and Moynihan circulated two legislative proposals to define abusive corporate tax shelters, establish new reporting requirements and significantly increase penalties (some mandatory) for understatement of income due to use of an improper tax shelter. FEI and other tax policy organizations (see, e.g., http://www.tei.org) went on record in opposition of the legislative proposals because:

• Abusive tax shelters are not defined and, as written, had the potential to capture many legitimate business enterprises;
• The new 40% penalties were unduly harsh, given Treasury's lack of discretion to waive penalties in meritorious cases; and
• Taxpayers had less ability to rely upon professional tax opinions/tax advisors in cases of substantial understatement of income.

Since neither Senators and Moynihan or Roth were reelected, the future of these Committee's initiatives is uncertain.

Even though corporate tax shelters are no longer on the "front-burner," this problem will not go away. Continued close IRS scrutiny of so-called BOSS shelters, debt straddles, liquidating REITs, and Lease-in, Lease-out transactions can be expected. It is also possible that political opponents of a business tax relief package would re-ignite calls for more hearings on the issues of corporate tax avoidance, prompt aggressive IRS enforcement action or calls for more legislation along the lines proposed by the Senate Finance Committee a few months ago.

GAO Puts Federal Government Operations in "High Risk" Category Due to Staffing, Financial Controls and Management
Comptroller General David Walker took the unusual step of issuing a report to Congress and President outlining the poor state of human capital in government agencies. Many federal agencies were considered at "high risk" for failing to deliver some essential government services and for fraud, waste and abuse (due to inadequate ability to audit contractor-provided functions). Lack of strategic planning, a pay and benefits structure that does not attract technically skilled people, an aging work force and little "new blood" due to periodic hiring freezes are all cited. Many government agencies that interact with the business community, including the IRS, Department of Labor, SBA, and Health and Human Services, are mentioned in the report. For organizations like FEI, the implications of this report are that there is a greater need than ever for associations to play a "watchdog" role to ensure that government functions as intended, and is available to the new administration and Congress to provide information and support on the needs of the financial management community.

Consistent with the new administration's desire to allow businesses to self-regulate, FEI (through its appropriate technical committees) will urge that the Federal Government's human capital "crisis" provides a good reason to streamline the regulatory process, with the private sector assuming an increased role in regulating business activities. The full report can be accessed at http://www.gao.gov.

FASB Project - Improving Business Reporting: Insights Into Enhancing Voluntary Disclosure
This just-released report studies corporate use of the many metrics other than pure accounting results in communicating the state of the business to shareholders. It provides a good overview of how this data is presented and used in certain industries. You can get the full report (free download) here.

"To Your Credit" Newsletter from GE Capital
A quarterly newsletter for senior finance professionals. Read the latest issue of the quarterly newsletter that delivers the latest on issues impacting the commercial lending industry, success stories from your peers on how they solved their financing needs, and more.

Upcoming Conferences
We have a terrific slate of conferences lined up for the coming year. Check them out on our conferences page. There's still time to register for our back-to-back San Francisco conferences, Driving a Successful IPO and our Annual Treasurer's Conference.

E&Y Year-end Updates
Be sure to join us for the first teleconference of 2001: Ernst & Young's year-end corporate reporting update. Sign up online here. Access E&Y's presentation.

BusinessWeek's 10th Annual Forum of Chief Financial Officers
February 28 - March 2, 2001
The Breakers, Palm Beach, FL
This exclusive conference will gather CFOs from leading global companies. Entitled CFO as e.biz Architect, the conference will address the critical issues facing CFOs in the new economy - from e-business to the latest technologies. Confirmed speakers include Gary Bengier, CFO, eBay; Robert H. Brust, Executive Vice President and CFO, Eastman Kodak Company; Jeffrey O. Henley, Executive Vice President and Chief Financial Officer, Oracle Corporation, Warren C. Jenson, Senior Vice President and CFO, Amazon.com Inc.; and more! FEI members who qualify will receive a special registration rate. To register, please call 212-512-6673 and provide your FEI identification #. For an agenda and complete program information, please visit BusinessWeek's website.

Job Posting- Treasurer
(FEI Job #5144) High-visibility position within an early stage, rapidly growing optical network company poised for significant growth. Responsibility for domestic & international treasury operations including debt & cash management, foreign exchange exposure, credit & collections, long-term & short-term cash planning & bank relations. Additionally, will lead all monitoring & evaluating of investment strategies associated with the company's cash management. This individual will figure into major growth plans & will have a significant opportunity for career growth. Requires previous experience as an Assistant Treasurer or Treasurer with a publicly traded company, ideally from the technology industry. Bright, articulate, strong conceptual & quantitative thinker with a ''can-do'' attitude. Send cover letter and resume to Beth Nelson, Kanzer Associates, FAX: 312-464-3719, E-MAIL: bnelson@kanzer.com.

To view more jobs, visit the FEI Career Center.

New Member Welcome
Congratulations to John Alchin, Treasurer, Comcast Corp., Philadelphia, and Regina Paolillo, CFO, Gartner Group, Stamford, CT.

That's all for now,