Question. Independence issues are main concerns …?

All right, good question, especially after this morning's announcement. I always had a tough time explaining that to the Asians that I had to deal with.

Question. Follow up on the Jenkins Report?

Jenkins Committee Report.

Oh, ok. Any other particular topics of interest?

International?

There's an excellent session with four excellent speakers this morning and this afternoon from 1:45 to 3:15. The last panel is just exceptional.

Go ahead.

He's been spraying Round Up.

Any other topics? Ok, let's get rocking and rolling then if we can. First of all just let me say I think that accounting educators have a unique, a very important role in our process. And I thank you all for asking me to come notwithstanding that I do need to put the standard disclaimer out there that says that the Commission and the staff; the viewpoints that I'm going to express today are not necessarily those that put the Commission and staff…and my wife and kids ask them if I'd throw them in there too.

But you really do establish the foundation for the future accountants in business today and I think that's extremely important. I know that the professors I had at Colorado State University and The University of Nebraska are a principle reason why I'm where I'm at today. Without them, I wouldn't have ever gotten there I don't think. And so I think that to roll and molding the future leaders in the accounting profession is a unique one and a unique challenge and opportunity. I did have the chance to teach for two years. I taught accounting theory and auditing and the Commission had thought that if you went in and worked with those students you could get them all up to a 4.0 and the 8th grade and now I understand that that isn't the case.

But I do think leaders in the profession are important; that's important to us on a go-forward basis. I would note that there is a couple of people in the audience even who today there's a fellow partners that I had at Coopers. Jim Harrington where ever Jim is sitting, who was a tremendous mentor, a great educator for me while I was a young partner at Coopers & Lybrand. We've got a gentlemen here that's been involved with the standard setting process for probably the last 20 or so years. Besides Jim, whose recent retired was very active from the industry side, traveled a lot, devoted a lot of hours and Bill Eielenfeld I commend him for the work that he's done, that taken that time out of your busy schedule is not always easy.

I think in the past we have had some distinguished leaders. We've had people like Leonard Spacek and Phil Defleece from the practice side, Sprouse, Moonitzs,, Payton, and Littleton from the accounting educators. And I think we need to get back to that. I think we need to raise the professionalism in the accounting profession if you will, over the last six years we have seen a lot of criticism at the profession. We've seen the PLB, the Kirk Panel reports that have come out who have been concerned about cheerleading. We've seen the Big 6 letter that came out and was somewhat disappointing with respect to the FASB's project on FAS 123. We've seen numerous challenges by the bankers and the congressional challenge of the private standard setting process. We've seen people raise questions about scope of services the growth of the auditing profession into a number of areas. Lately we've seen a lot of articles in the newspaper questioning the quality of audits. You heard Walter Scheutz yesterday speak about the fact that notwithstanding there's been no changes in a business operation. We're seeing situations where the only changes auditors from one firm to another, that's resulting in significant changes in the numbers that are reported in the financial statements and I can't help but feel just from a personal perspective that raises a question, you know. If nothing changes in the business, the only thing you changed is auditors, how come the numbers turned around and changed.

Of about 160 executives where 12% of those surveyed in that indicated that they had actually been asked and had misrepresented the financial results for their businesses. I was actually invited to that conference, and so I know that the participants did not attend so I'm not in the 12%. But that conference is made up of some outstanding CFO's. We are talking Fortune 1000, Fortune 500, and Fortune 100 type companies. So it's extremely disappointing to see that we have that level of professionalism, and I think we need to change that. I think that we need to become a proud profession again. I think we need to have a high degree of professionalism. I think that high degree of professionalism makes good sense from a business prospective.

When we found in the late 80's and early 90's we didn't have that degree of professionalism, and we went through the S&L and financial institution debacles, we found that a lower level was also bad for business. So I think we need to get on with that and we need to see the leaders willing to speak out on the important issues that the FASB and the private standard setting process. International accounting is certainly going to be important to us.

I think the roles of the audit committee in this entire process is extremely important, and certainly independence has and will continue to be a debate. Notwithstanding that, though, it needs to start in the classroom with a lot of the people that are in this room today. We need to set the right standards and the right tone with the students, if we don't start there then it will be very difficult for us later on to change thoughts and perspectives. We need to hold those students to the highest standards. They need to understand that they are coming into a profession it's not like the attorneys, it's not like the doctors. The Supreme Court has turned around and said we are a public watchdog. They have turned around and put us on a very high pedestal. We are not like the rest of the world. And without a high degree of professionalism we will not have that pedestal. We will have it kicked out from underneath us and we will have our very important role taken away. So I behoove that the educators take that role.

With somewhat disappointing recently when I saw or heard about a study of some business school leaders where they said if they were faced with the opportunity of raising a million bucks in fund raising or taking an unacceptable student what would they do. And they said we'd take the million bucks. And I think the real answer to that is only one answer. It's not just no you shouldn't do that. --- it should be hell no, that's the not the right answer. If we don't set that tone, we are going to have problems. We'll have some of the problems with some of these accounting students going out into the field and saying hey, they didn't require that level at the business schools why should I have to set that standard out in the profession when I get out into practice. And I don't think that will do any of us.

And so with that as background, let me then talk about a couple topics including some of those that were mentioned. We will try and cover all of them. Issue of independence. Independence has been out there for a long time as a question and an issue. I remember going through school reading research reports and studies that were very important to us. They were --- it was of interest then, it will be of interest probably about 20 years down the road. But in '87 the Big 8 Firms at that point in time came into the Commission and put a petition that would allow them enter into more businesses without impairing their independence. In the early '90s the staff issued a report on it. Later on that was followed up with some cheerleading accusations that I mentioned. And in recent years there has been a tremendous conflict between the SEC, the Commission itself and the accounting profession. The accounting profession did a White Paper that was extremely critical in my viewpoint of the SEC, and I think personally was way out of line. But that led to a negotiation settlement in the war if you will and the establishment of an ISB.

The ISB is starting work even as we speak and I think you will see more about it in the ensuing weeks, and ensuing months; a study and a project to establish a conceptual framework. And it will be a conceptual framework on which we start giving answers to questions about independence. And I think it's an excellent project for the ISB to start with. I think it's the right approach. I think it'll allow us to get away from answering specific questions and getting into a broader framework and allow us to do some research and answer some very basic fundamental questions that need to be answered.

For example, what factors effect auditor's decisions? Do auditors use information available from the consultants? A lot of times we hear that the accounting professions say that the consultants add value to the auditing process and I actually personally agree with that. But the question is do we really use that value and that knowledge base that's in the consulting side of the business over in the auditing side, I think an excellent topic for research.

And a third topic for research maybe what causes the conflicts and impacts the credibility of the auditing firm in the eyes of the investors. And I know that's been kicked around, and I know the ISB is looking for research in that area. So again I think Commissioner Hunt talked a little bit about this in the keynote and I'd encourage you to think about that. Other topics that they are going to be addressing is family relationships, auditing communications, materiality and internal audit and other forms of outsourcing, and the acceptability of those. I think those especially materiality provide some good sources for topics for research.

In the meantime, we will continue to monitor very closely the independence of firms. There was an announcement today by one of the major firms that they are in fact going to look to monitize their consulting practice, which will raise numerous issues in the context of can their clients if they were to do that in a public offering, can their clients go in and buy investments in that auditing firm. A lot of other follow on questions that I think will be interesting that we expect to be dealing with on a timely basis in the ensuing weeks if you will at the Commission staff.

So I think that's kind of where we're at with respect to independence. I think the question that was tee'd up was a little bit more in the context of consulting. Some of the services certainly in a number of those cases the services now are over 50% of the revenues of the firms. I think again we need to go back to the research and see where some of the questions come out to really assess whether or not some of those services just in fact do impair the auditor's independence. My experience was when we got down to tough decisions as an audit partner including in some of the national consultations the issue wasn't just tied to consulting. I remember a situation where the audit fee was two million bucks; there was no consulting services. But that fee is so big at that point in time, it's probably more difficult to make a decision in that environment where the only client that that customer, that auditing engagement partner has is that one two million a year fee client. And is he willing to make a tough call that might cause him to loose that client?

And in that case I think that's a tougher call than our [???] engagement where it’s a $100,000, maybe $75,000 at consulting, only $25,000 in audit fees just because the magnitude and what it means to the partner. It really raises the issues about materiality, the scope of services and I think you have to pull all that together and really think about it before you rush to a conclusion that anyone thing does or does not cause a conflict with independence. And I think we'll see that coming out of the ISB and certainly hopefully out of the director of the new conceptual framework project, which will hopefully be announced here shortly.

So putting independence aside, let's move on to another item that's been in The Wall Street and been reported in some other areas and that's questions about earnings management. We certainly have earnings management that is acceptable, i.e., at the end of a quarter they may fulfill what their forecast are on revenues and decide not to ship anymore product and save the shipments till the next quarter. And there is nothing wrong with that as long as people have adequately disclosed and appropriately disclosed in their MD&A what is going on with that. It becomes a problem if they decide to hold open the books or go past midnight on those shipments. Now that would cause me some heartburn. But people need to understand we've got ok and we've got not ok earnings management and our focus will be on what is the not ok.

We've got to make sure that we have a very strong foundation in our numbers. The numbers, the financial reporting is the foundation of our system. And when we have a question about the integrity of those numbers, we're questioning the basic integrity of our financial and SEC filing system. So at the Commission we are going to make sure that that foundation's built out of concrete and not straw that gets blown away. In that regard, the staff has noted a lot of articles there've been articles in Business Week, articles in various newspapers, there was a recent article labeled Accounting Abracadabra if you will. In USA Today, it's interesting that now the accounts are getting to USA Today. There was a recent article if you will, in Bloomberg. I don't know if all of you can see it in the back. When I took my son to the airport I picked this one up because it certainly got my attention. It says Ten Ways Earnings Lie. And when you see the "Lie" in bright red and orange, I don't think it's a good story in the context of our financial reporting systems.

What issue is that?

You know, I think it is fair for the public to turn around and say what was going on with the accounting profession when they couldn't find the journal entries for half a billion dollars. You know, even my kids ask me you know, Dad couldn't you find the half a billion dollar journal entry? And that's a fair question. So certainly that's got our attention.

We are going through a process now whereby we're meeting with people in the various accounting firms. We're meeting with representatives of the standard setters, analysts, academics, CFOs as well. I think it's extremely important that we have them in on the process. And during that we are going to be focused on what are the potential issues that are out there that are causing people to turn around and challenge us. I think we will get into discussions about some of the EITF --- not only their accounting that they have for re-structuring charges. We are going to get into their disclosures. We've been informed that a lot of people are not making the required disclosures for these types of charges, and as a result we are going to have renewed emphasis if people file their filings without including all of those disclosures, and the accountants issue an opinion that's a clean opinion not withstanding that all those disclosures are in there. I can guarantee you we're going to look at that very hard and take the appropriate action against those firms who decide not to make the disclosures that are required to investors and the accounting firms who are willing to give a clean opinion. And in my opinion turn around and make it look bad for the rest of the profession because of some individual partner decided to issue a clean opinion when the rules weren't followed. We will deal with those people appropriately.

We are going to follow closely the FASB project on their definition of constructive obligation that Jim mentioned a little bit earlier. We think that we need to make sure we set a standard that's both operational and enforceable, not an easy thing to get to in this area. I think that's a very difficult task that's confronting the Board. That's probably why we got the good people that we got there, though. There's no doubt in my mind they'll come up with the good standard.

We are going to look at our own schedules, our own disclosures. Maybe, perhaps we need to do something there. And while we're going through this though, we are going to continue to use enforcement where we need to protect the credibility of the profession, the credibility of the numbers and the quality of the numbers. And we are also going to challenge the audit committees. We are going to ask the audit committees where were they in this whole process. Again when you've got a half a billion dollar numbers that are popping up that people said that they didn't see I think it's fair to turn around and ask the audit committee where were they in the whole process. And in fact the chairman made a speech in March 1998 down here in New Orleans where he talked about accounting committees. Said they need to become better informed and should be asking the hard questions that the auditors and they should be asking the auditors about the quality of the reported earnings in the financial reporting that is being done. And I would expect that we'll be, as the staff of the Commission will be following up on the Chairman's Commissions, the chairman's comments in that regards.

I think we also need to go back as a profession, need to look at how we as a profession can help the audit committees increase their effectiveness. I think we need to consider how we can implement the recommendations that were made a few years ago in the Kirk Panel Report. Recommendations such as insuring that the auditors understand that their client is the audit committee, it is not the management team. It is the audit committee and that's where the responsibility goes to. I think that that needs to be done. However, I don't think that can be done while alienating the CFO having been a CFO and work with some good audit committees in the part. I think that's really a relationship between the CFO and the audit committee and the auditor that needs to work together as a team to address the issues and the controls that need to be focused on.

We need to have the auditors add the reporting to the audit committee about the quality of the reporting that's being done. We need to have a robust discussion with the audit committee about the independence of the auditors. The Independence Standard Board has got a proposal out there if you haven't commented I think I would recommend that you do comment on that. It's suggesting that the recommendation is that the auditor has to confirm with the audit committee that they're independent. The Public Oversight Board has said it needs to go beyond that. In their comment letter they said there needs to be a robust discussion, discussion of the services the auditor's doing and put the audit committee in an informed position about those matters. And I certainly commend the POB for their recommendation and would agree with that. And I would expect that at the end of the month we'll see some action out of the ISB in that area.

As far the international accounting and auditing area, again I'd refer you back to the panel this afternoon where we'll get to it in more detail. Certainly the Commission came out a few years ago and indicated that there was a number of tests that they were going to look to see if they would do something with international accounting standards. As Commissioner Hunt said yesterday, "We have not yet made a decision whether or not in fact we would accept IASC standards." So people should be very clear that the possibility exits that we would not accept them if they don't meet the test that have been set forward. Those included they had to be of high quality, they had to result in transparency and comparability and provide for full disclosure. And third an issue which I think has been somewhat overlooked is that they can be and will be rigorously interpreted and applied.

It does us no good to have good standards if in fact we are not comfortable that around the world that those will be in fact complied with. I think the notion of international standards is excellent. The company where I was a CFO, we were an international company. We were majority owned by a company from overseas. I had to do reporting to the public to the lenders on a US basis. Had to report overseas on a home-country basis. So I think I would welcome seeing if we can't narrow these differences, but I don't think we try to go to a new standard if it doesn't meet the quality of the standards or meet the characteristics of what we establish here in the US for quality standards. And I think the biggest thing I'd say there is stay in tune. I would expect that we will be developing a clearer road map on where we are going to go with that in the next few months.

Let me talk briefly about our rule proposal on Rule 2E proceedings. We put out a rule proposal back at the end of June. The real question raised in that is what is the standard that should be used in determining if we are going to take disciplinary actions against, not just auditors. A lot of people focus on auditors. But if we are going to take actions against the CFOs, the controllers, and people in the accounting and finance department, and we have taken and will continue to take action against all of those. And in the rule proposal that basically established a negligence standard, people have turned around and said why would you turn around and have a negligence standard for the auditors but perhaps have a recklessness standard for the management under Rule 10B? I think that's a fair question. Again I think you have to keep in mind the pedestal that the Commission and the Supreme Court have put the auditor up on though. It is a different role; it is not the same role. And we need to insure that that function is being performed at the highest level possible.

The comment period ends the end of August. We have been diligently working with the accounting profession in the meantime to see if we can improve and come up with even a better final rule than what was exposed. I would say again stay tuned to that and we will see what happens with it.

Another matter on the Rule 2E side has to deal with concurring partner reviews. And concurring partner reviews are very important to us because you have the first partner look over all the work papers and look to see if it was done ok. Adequate supervision; we've put in place a control for those auditors of public companies that they have a second partner then overlook the first partner. It's clearly a check and balance in the system and notwithstanding that we've seen all these situations including the situation where we couldn't find the half a billion-dollar adjustment. You wonder about how you know, you've got a group of people that can't find those adjustments.

So the SEC a number of years ago took a case which is widely referred to as The Pott Case against a concurring partner and censured him. It went to the Commission. The Commission upheld the decision of the ministry of law judge. The concurring partner, Pott's, appealed it then. And just last week we had a decision back from the 8th Circuit Court of Appeals that did very strongly in their decision affirm the Commission's position, the fact that there are in fact are professional standards out there for concurring partners. The Commission has outlined those. There are a very high standard for concurring partners. The profession itself has never put anything out in black and white and decimated it on a white bases to the average practice partners, concurring partners out in the offices, the people that are actually having to do the work. I've talked to the profession about that, and said I think that we're hanging those people out to dry if you will if we don’t give them adequate guidance. And I think it behooves the profession at this point in time to work with us to get that guidance out to the people that would actually fall underneath it. Because right now all they have is the court decision and certainly that court decision isn't widely decimated to that. So we've got people out there practicing in being held to rules that they have no notion as to what they are. Maybe not quite that far, but don't have a clear notion of what those rules are and we need to get something out there for them.

Let me talk, since Jim talked about some of the FASB projects, let me just touch on a basis on a couple of those. First of all, the Chairman and I are very strong and very vocal supporters of the independence and integrity of the FASB. I've worked with the board at the FASB for many years going back to the point in time when I was in the national office in Coopers from '83 to '85. These people have an almost impossible role --- it doesn't care what positions they turn around and take. Someone's out there saying that they got the wrong answer so they're subject to a lot of criticism. I think if anyone had to put themselves in those shoes you'd find that it's an extremely difficult task and notwithstanding that, we have people in the profession that are willing to stand up and take that type of abuse if you will. But I think overall, over the 25 years that they have been in place they've done an excellent job. I think that’s why in fact we have the best capital markets in the world. There's no question there is more cash coming into the capital markets in the US than any place else. I could've taken and gone out and sold a bunch of my public offering at my last company into Asia and I know everyone of those shares would've literally been back into the US within six months because that's where the quality market is. And I think that it's there to a large extent, to why the people like who serve on the FASB done a good job, given us good rules. They aren't perfect; I think that when you put seven accountants in a room anyway you are never going to get a perfect answer. You're lucky if you can get two of them to agree let alone trying to force them into a situation where five of them have to agree under sunshine. So it's a difficult role, the Chairman and I are extreme supporters of that process and of the standard setting and I commend them for the work they've done.

We are going to be actively monitoring and overseeing a number of their projects including the one on business reporting models, I think perhaps that's one of, if not the most important project they've got going on. We're behind the times in the accounting profession because the technology changes and we need to step up. If you were to look at a company like Nestle, 17% of their stockholders --- they're a Swiss company --- if you've got kids you know they sell chocolate. 17% of their stockholders are now Americans; they are not listed in the US. This is Americans that have gone overseas, called their broker over there and turned around and bought shares over there. Nestles is not subject to US accounting standards. Nestles is not subject to US auditing standards. And it raises a basis fundamental question if 17% of their stockholders are Americans who are able to or willing to go outside the system and invest there; do we really have the model here that would tell us that we've got the right answer?

You can take it so far as to say we don't need US standards and we don't need US auditors, if these people are willing to go out and put themselves in that situation. I think the real answer is the accounting profession needs to run and run fast to get themselves in a situation where we're dealing with some of the standards setting on an international basis. And I don't think the answer is just to throw out our standards here. Again because what we've found is the most money in the world is attracted to the US markets. And keep in mind that's the most regulated marketplace in the world. What we're finding is money doesn't flow to the least regulated, it in fact flows to the most regulated. And that I think tells us something about where we need to go with our standard settings.

So anyway, the business reporting models' important. Business combinations, the pooling versus purchases' very important. Walter made some comments yesterday about why he didn't understand why goodwill was an asset. I can tell you as a CFO when I turned around and paid money for a company I was looking for cash flows. I was looking for things like marketing channels, customer tie-ins, a place in the market place. And a lot of times all that gets tied up in the notion of goodwill if you will. And if I went out and paid a half a billion dollars for a company and I had a couple hundred million dollars in goodwill, I have a very difficult time with Walter's comment about why he can't understand economically why that is an asset. I don't think that he'll find a CEO or a CFO in the country that's willing to stand up in front of their investors and say; I just paid a half a billion dollars for this, and oh by they way $200 million of this sucker is not an asset, you know. Economically it just isn't there. I think what the board does need to do is look hard at its definition and make sure it comes up with the right basis for why it is an asset and support it in the context of the conceptual framework. I absolutely agree with Walter on that point. But I think from the office of the chief account's perspective and certainly as a former CFO that stuff's an asset. It may not be something that we can touch, feel, kick or whatever, but you know. At the end of the day when I spend $200 million for it I can guarantee you that cash goes out and that was an asset.

We are going to follow their work on constructive obligations closely. The AICPAs got a project on revenue, software revenue that someone raised a question about. We're going to be following that very closely. I think the new rules are excellent, there good, they're tightening it up. They've got a proposal out there we've talked to them about that. We want to make sure that any revision to those rules don't loosen what's already in place, we would be troubled by that. And I think the new rules will in fact address a number of the issues that were problems and we'll see it move forward.

In the context earnings management revenue recognition has been teed up as one of the major issues. Some people believe we need to put accounting guidance out there and that's one thing that we'll consider it at the Commission. The other thing is they're saying that auditors can audit or they, which I don't agree with --- I think auditors can audit revenue. I think we need to get them focused on looking at the right things so we will be talking to the Audit Standards Board about whether or not that's an issue, and whether or not we need new guidance in that area.

Jim mentioned leases, he's right, he was wrong about the fact he'd only seen two on the balance sheet. I had three SPE leases Jim sold; three are on the balance sheet. If you'd seen two others we've got five.

Yea, major improvement; we've doubled them, ok. We're also going to be actively monitoring the new standards for derivatives. Jim is right, the FASB course is excellent. We have sent all the staff at SEC through the FASB course on derivatives so if you wanted to look at something that the SEC staff has looking at for training it is that course that's excellent. I recommend you get your hands on it. And that's not a sales pitch, Jim doesn't give me any royalty from that, but it is an excellent course.

We're going to look at segments. If we have to challenge people on segment disclosures we're going to do that. We are not going to let the implementation go the path that I think it did under FASB 14, where there was an adequate implementation. If we read a filing or look at analyst reports and see information that would turn around and tell us that people are in fact reporting more segments up to the management team than what we're seeing in filing that I'll ask them for the board package. And the reporting to the board; they can expect I'll ask them for monthly, quarterly, and annual reporting packages. And if that's inconsistent, then I'm going to come back and I'm going to look to the CFO and I'm going to look to the auditing firm and while this is disclosure I don't care if it's only disclosure. I'm going to want someone's patusky if you will out there on the chopping block. And we're going to go after them, and we will go after them hard! There is no reason when we come out with new standards in this profession that day one we start down the slippery slope.

We need to have that leadership. We need to have a high degree of professionalism. And if I find a lone wolf that starts us down the slippery slope, I'm going to go after lone wolves. And lone wolves get eaten alive. It's only if they hunt in packs that they're ok.

Finally, we did put out a release on Year 2K. We continue to monitor that. There are a lot of concerns about whether companies are going to be where they need to be. The new release does turn around and say we expect an honest to goodness assessment disclosure that assessment about where they are. The information basically needs to tell the investor where you're at and whether or not you think you've got a reasonable chance to getting there or not. It requires it be made in a great degree of detail. Along those lines, the AICPA has put out some recommendations in a booklet that was excellent that discussed what the auditors and accountants should be doing and considering.

While in that booklet the accounting profession said these may be things that the auditors should consider. We helped them out and we turned around --- well my perspective is we have to --- well I don't know if they all agree but we turned around and said not only is it made that you should, but rather that the accountants and auditors should be following those steps. And if they don't follow those steps consistent with what we do with the EITF, we would ask them why they haven't followed those steps, especially if there turns out to be a problem later on.

I think I touched on revenues and pooling. Again I think Jim's comments on pooling were appropriate. I think in this area the international bodies are actually ahead of us, they've got better accounting. It'll be interesting about the comments from people in the US who will turn around and tell them we want to go with the international rules. Because it will basically result in a lot fewer poolings, and perhaps at that point in time they won't be quite as excited about the international rules. But that's one area where I think the international standards setters have gotten ahead of us and I think it does raise the valuable or a very serious question about why we have two acceptable ways of doing it versus one. I can look at most of these things and by God it looks like an acquisition to me. If you've got one CEO going out underneath a golden parachute, you know the day after the acquisition was done, that turns around and tells me these guys weren't merging and just coming together on an equal basis.

On push-down accounting, really nothing new there other than we continue to have numerous questions day in, day out. In fact I have one up in the hotel room I've got to go deal with on a pushdown basis. Basic same standards, if there's been an acquisition, 95% or more, then you're into a pushdown type situation. If it's less than 80% we don't require push down; 80-95% it's optional. But if you start screwing around with the transaction to try to groom it as Jim says to get into that 80 to 95% you get a bunch of affiliated people in there to break the 95%. Then we look closely at those transactions to see if in effect you still are required to do pushdown. So I think that lists almost all of them.

Question. I had a question for Jim. You talked about obligation for redeemable in stock or equities where one party's put at risk. Do the equity shares expand on that? I'm not familiar with that entire topic.

Question. Lynn, the SEC pretty well squelched the Kirk White Paper. Do you expect any further clashes with the ISB/ASCPA?

I don't think that the SEC squelched that White Paper, ok? I saw the White Paper for the first time back in December even before I --- the Commission even approached me about this position. At that point in time when I first read the White Paper I was extremely disappointed in it as a member of the profession. I would of hoped that the profession on a whole, not just the people who wrote that paper, but the profession as a whole would look at that and at the end of the day would reject it. I think it was extremely self-serving and was not an honest intellectual paper if you will be getting us to where we need to be.

Notwithstanding that, I do think there are some concepts in that White Paper that are valuable concepts that we need to turn around and look at. And we need to dig in. And I think there was a fierce battle going on because of the concerns of the Commission and where the profession was going with what the standards should be. That concern has not gone away, I think it's still at the same level that it was before hand. But what I would hope is that with the ISB in place, that we can work better with them if you will, have some open dialogue some open communication of the issues on both sides, ok. And get down to working on those. Getting down to looking at what are the actual facts and circumstances that we need to address. And I think before we can move that to conclusion though, I think we're going to need some research on some of those basic issues.

I was in a meeting just last week with a group of analysts and during the meeting they turned around and said, hey we've got a problem. These auditors are not independent because all the consulting stuff. And I turned around and threw the question back to them. I said, well what if the auditors is turning around and using the knowledge in the consulting side to better understand the business and risk and really get down to looking at the numbers that they need to look at hard. What would your thought be? Does that impair independence or does that add to the quality of the audit? And the analyst said hhumm --- you know, good question. You know maybe it adds to the value of the audit as opposed to detracting from the independence, ok.

I don't know that it does one way or the other, if done in the right way. But those are the types of questions we need to ask and address. And I think we pick up the paper and everyone and rushes to the notion that all these services impair independence. And some cases I actually do think they do. I think that in the case of valuing in process R&D it is a serious problem. In other cases, I've seen from my past experience it was very beneficial. And would probably be very beneficial to the audit committee even if you can bring those in and use it as an educational process. And I don't think that we should be trying to reach to conclusion is it or is it not a problem until we see what the researchers and what the conceptual framework taskforce is able to come up with. You guys need to get down and do some serious research and people ask me well, what is your timetable, and as I tell everyone on almost everything, yesterday was a fine day.

With that, I think we're out of time. I'd like to thank our panelists and thank you for attending.