Committee on Finance and Information Technology (CFIT) Staff Liaisons: Bill Sinnett and Maria Zadravac CFIT met on June 13, 14 and 15, 2007, at the Microsoft office in New York City. The Committee heard presentations on: Extensible Business Reporting Language (XBRL) by Mark Bolgiano, Rob Blake and Michelle Savage of XBRL-US; International Financial Reporting Standards by David Schmid of PricewaterhouseCoopers; Information integrity by Madhavan Nayar of Infogix; The COSO Monitoring project by Russ Gates of DuPage Consulting ( a member of the Grant Thornton COSO project team); Profitable and Effective Control and Risk Management by Mal Schwartz of CRS Associates LLC; Val IT and CobiT by Ryan Cawley of Seaquation; and The results of the FERF/CFIT/CSC Technology Issues survey by Jerry Boltin of CSC. The next meeting is scheduled for September 13 and 14, 2007, in Mountain View, California. If you would like to visit with the CFIT committee, please contact Bill Sinnett at bsinnett@fei.org . Committee on Taxation (COT) Staff Liaison: Mark Prysock Recent Meeting: The COT met in Washington, DC on June 20 and 21. The group received an update on the federal budget from Peter Orszag, the Congressional Budget Office Director. The group also met with Michael Desmond, Tax Legislative Counsel with the Treasury Department, who briefed the group on several tax-related legislative and regulatory developments. Ms. Pamela Olson, a partner in the DC office of Skadden, Arps, briefed the group on a coalition working to protect privileged documents from mandatory disclosure under various accounting standards and interpretations. Joe Crosby, Direct or the Council on State Taxation, updated the group on developments regarding state tax withholding obligations for “mobile” employees. Economic Substance Doctrine: The COT will file comments shortly on a Senate legislative proposal to codify the judicially-created economic substance doctrine. The Senate proposal provides that a transaction has economic substance (and thus satisfies the economic substance doctrine) only if the taxpayer establishes that (1) the transaction changes in a meaningful way (apart from Federal, foreign, state, and/or local income tax consequences) the taxpayer’s economic position, (2) the taxpayer has a substantial non-tax purpose for entering into such transaction and (3) the transaction is a reasonable means of accomplishing such purpose. The COT has actively opposed recent Congressional attempts to codify the doctrine, successfully arguing that the proposed legislative language is extremely broad, and would likely result in the denial of tax benefits for legitimate business transactions. Tax Havens: Several legislative proposals have been introduced this year to address perceived abuses involving “tax haven” countries. Proponents contend that tax non-compliance involving foreign tax havens reduces federal revenues by approximately $100 billion. Senators Dorgan (S. 396), Levin (S. 681), and Kerry have all introduced bills to clamp down on the use of countries deemed to be tax havens. The COT has identified several problems with the proposals, and has developed a white paper highlighting ways in which the legislative could have a narrower (and more effective) impact. The COT plans to meet with key policymakers to further discuss important concerns with these proposals. Committee on Private Companies (CPC): Staff Liaison: Serena Dávila In July, the new leadership for the Committee on Private Companies will take over. Deborah Wilson will become the full committee chair. Mark Smetana will become the policy subcommittee chairman, Bill Koch will become the standards subcommittee chairman and Mark Rusch will become the program subcommittee chairman. The next Private Company forum will be on October 11th and 12th at the Ritz-Carlton in St. Louis. The program subcommittee is finalizing the topics for the program. The Program, Policy and Standards subcommittees will meet on October 10th. The Standards Subcommittee is preparing to draft comments on the IASB’s Exposure Draft on an International Financial Reporting Standards for Small and Medium-sized Entities (IFRS for SMEs). They plan to compose a comment letter on the issue. Comment letters are due October 1, 2007. Committee on Benefits Finance (CBF): Staff Liaison: Serena Dávila The Committee on Benefits Finance met on June 11th and 12th in Washington, DC. The committee discussed Trust-Owned Health Insurance (TOHI), retirement issues on Capitol Hill, hedge funds, hot topics for the committee and the committee heard from several speakers from Capitol Hill on general benefits issues and on the budget. In June, the committee joined other organizations in sending a letter to key members of Congress on the backloading issue for defined benefit plans. The committee is also monitoring health issues and benefits issues on Capitol Hill. Committee on Corporate Reporting (CCR) Staff Liaison: Christine DiFabio CCR Meeting: CCR’s held its most recent quarterly meeting on June 7 and 8th in Stamford CT. The meeting included a two hour public session with the full FASB Board as well as discussion with PCAOB Chief Auditor regarding AS5, the new internal control related auditing standard. Additionally, IASB Vice Chairman Tom Jones provided an update on IASB related activities. Other discussion items for the meeting included the SEC GAAP/IFRS proposals, the SEC’s new management guidance on Section 404, PCAOB’s new AS5 standard on internal controls, FAS 157 implementation discussions, and COSO monitoring project update. CCR will meet again on September 6-7 at the Gaylord Texan Hotel in Texas. Subcommittee Liaison Meetings: Subcommittees meetings are currently being planned for August with the SEC, PCAOB and FASB. Comment Letters: On June 18th, CCR filed an unsolicited letter to the FASB regarding their ongoing project on Business Combinations and Noncontrolling Interests. The letter was a follow-up to discussion had with the FASB during the meeting on June 8th. The committee continues to have concerns with the decisions reached in this project, which the FASB plans to finalize in the coming months. CCR is developing a comment letter to the SEC in regard to its posting of the PCAOB’s Auditing Standard No. 5 on Internal Controls which replaced Auditing Standard No. 2. Comments are due July 12th. Other Items: Effective July 1st, Arnie Hanish, Executive Director, Finance and CAO, Eli Lilly and Company will be the new Chair of CCR. Vice Chairs will be Loretta Cangialosi, VP & Controller Accounting Services, Pfizer and Ron Olejniczak, Vice President and Controller, Aetna. Subsequent to the March CCR meeting, members of CCR became part of a task force on materiality working on developing common guidance to provide to the SEC in the areas of qualitative and interim materiality. The task force includes preparer representatives as well as representatives from the audit, investment/user, consulting, and academic community. Members of the task force will be meeting with the SEC on July 9th to discuss recommendations regarding a common approach to interim materiality. Members of CCR continue to work on the development of the program and speakers for the 2007 CFRI conference. The conference is being chaired by CCR member, Marsha Hunt, Vice President and Controller, Cummins Inc.