I'm writing this on the last leg of a truly incredible journey. My wife Karen and I are just landing in Newark after a 24-hour trip home from Sydney, where we attended the International Association of Financial Executives Institutes (IAFEI) annual meeting and world congress. Sydney was in a state of post-Olympic depression. All the shopkeepers were quite bored after a year of intense activity as they prepared for the games. We didn't make it to the games, but the city was still in full Olympic splendor. Bondi Beach was definitely the highlight of our trip, with spectacular scenery in all directions. The "Aussies" kept trying to get me to go for an early-morning surf, assuring me that I was too big and tall for any shark to consider taking a nip. But, I'll bet they just wanted a big decoy, so I passed on the invite!

Pooling and Business Combinations
Congressional Legislation Introduced. Last week, Representatives Chris Cox (R-CA) and Cal Dooley (D-CA) introduced a bill to the House that would require a one-year moratorium on FASB action to abolish pooling accounting. This is an unfortunate development in the business combination debate. The lack of political intervention in our accounting standards process has been a hallmark of our capital market. Countries around the world continue to suffer from similar public policy and statutory financial statements that garner little support from investors.

That said, this escalation, which drew a quick and strong response from the FASB, reflects some fundamental flaws in our process. Read their press release here. I asked some of our key FEI leaders to comment on this development. Here are some of their responses, which I provide without attribution, but with their permission.

Member #1 - "I do not like having Congress involved with accounting standard setting. But like the employee stock option model and loan loss accounting (to name a few), the flaw is the process: FASB and the SEC do not consider broader issues when they set accounting standards. In fact, it is not always clear that the standards always improve information to investors. If we wish to support such an initiative, we should address the process and not just the issue. Defining which economic, investor and business issues should be considered and how much weight they should carry vs. the "purity" of the accounting will not be easy. But, the number of times that companies have turned to Congress to resolve disputes with FASB and the SEC in recent years shows the wide-ranging implications their decisions are perceived to carry."

Member #2 - "I agree with Member #1. Congress having to get involved is an indication that the process is not working. I feel that the SEC has insulated the FASB to such a great extent that they no longer feel accountable. I guess this is why Congress has to step in to play that role."

Member #3 - "I too am disappointed that certain members of Congress have been goaded into introducing bills regarding accounting issues. I believe this sort of action further weakens the FASB and ultimately strengthens SEC standard-setting. As much as the SEC touts its requirement to get public input into its rules, we all know that they mandate whatever they want. This situation is best exemplified by SAB 101."

I think we all agree that we can have the most influence on the FASB, and the least on the SEC. Therefore, FEI should continue to give its utmost support to maintaining an independent FASB.

I have to say that I disagree with Member #1. At the end of the day, the best accounting rules are those that are not impacted by certain local, regional, national, or industrial concerns. What's good for the banking industry might not be good for utilities. What's good for Silicon Valley might not necessarily be good for Detroit. And thinking only of U.S. companies will not achieve the ultimate goal of rational and consistent international accounting rules. We don't want the FASB to be in the middle of deciding economic impact. They would progress even slower than Congress!"

Video Interview with Ed Jenkins, Sir David Tweedie and Tom Jones
I had the pleasure of sitting down with the chairman of the FASB, current IASC Chairman and the next IASC Chairman all at one time last week in Sydney. We captured it on digital video and it's here for you to view. We discussed the status of the new IASC formation and some other interesting issues. There is nothing like hearing directly from the key players. Check it out.

Limits of Liability Survey
FEI partner Marsh Inc.'s annual study of liability insurance limits is now available to FEI members. The study of over 2,400 U.S. and U.K. companies by Marsh, the world's leading insurance broker and risk advisor, finds that businesses of all sizes increased their liability insurance limits in 2000, continuing a five-year trend. In an environment that remains hospitable to litigation, generating huge awards and settlements, this is a helpful tool for companies to understand their exposures, as well as a benchmarking tool for reviewing their limits-purchasing decisions.

The report is available at no cost from Marsh by contacting Gail Murray-McCarthy, Marsh Inc. at: Gail.Murray-Mccarthy@marshmc.com.

EITF Resolves Several Stock Option Accounting Issues
Frederick Cooke, noted executive compensation consultant, released an update on recent EITF actions related to stock option accounting. The EITF dealt with a number of significant issues including some related to private company option grants. Click here to read his write-up.

Congratulations!
FEI Vice Chairman Dave Young was recently appointed the new Chief Financial Officer of Adaptec in Milpitas, CA. You can send him a congratulatory e-mail at dyoung@adaptec.com.

Job Posting: CFO
A $275 million profitable division of an international manufacturing company seeks a CFO for its Western Pennsylvania location. Reporting to the Division President, the CFO will have a minimum of five years of progressive senior management experience including ten years of related accounting experience from a manufacturing company. Overseeing the accounting staff of twenty-five in the six business units within the division, the CFO is also a key member of the leadership team ensuring growth of the business through financial and strategic decision-making, contract negotiations, and customer relations. Please send resume to Gary Roffman, Battalia Winston International, Fax: 212-355-7146, e-mail: groffman@battaliawinston.com.

For a complete position description of the above job (FEI Job #4980) and to view more jobs, please visit the FEI Career Center.

New Member Welcome
Congratulations to Joseph Baumgartner, Controller, Motorvac Technologies, Inc., in Santa Ana, CA and Douglas Betlach, Executive VP and CFO, Viasource Communications, in Ft. Lauderdale, FL.

That's all for now,