The need for reliable financial reporting is growing more important with each passing year. Whether they are aware of it or not, accounting standards affect most of our citizens and thus necessitate that we maintain the highest accounting standards practicable.

Americans are increasingly preparing for their future financial needs by investing in public companies through retirement plans and individual accounts. More than half of all Americans are now invested in the equity markets in one form or another. Since, most Americans have a stake, directly or indirectly, in equity markets reliable and accurate financial information about publicly traded companies is most important to them, as it is to our financial markets in general.

The emerging global economy also dictates that we maintain high standards. Geographical boundaries are no longer a barrier to trade and commerce in our evolving digital world. While this has opened new doors for US based companies, it also means that our companies face increased competition in a global marketplace. While one of the benefits of this dynamic is a greater and more efficient flow of capital across borders, it requires us to constantly monitor our reporting standards to ensure our standards attract capital rather than present a barrier. And the competitive landscape is not confined to the large publicly traded companies. Private companies seeking capital are increasingly able to solicit foreign investment.

I strongly support our structure of an independent standard setter. The transparency of our accounting standards and reporting system are primary to the decision making process of investors, and I think they would agree. I find that the results of the FASB's business combinations project and the related accounting treatment for intangible assets, as outlined in Statements' 141 and 142, speak well for having an private independent standard setting board. The FASB should be commended for an open process that included several public hearings and working with all parties to understand their concerns regarding business combinations. What the FASB has accomplished is a tall order, considering that less than two years ago interested parties were vociferously debating business acquisitions, for example, where the acquirer had reflected only 5% of its acquisition costs, as costs.

Although the resolution of the project is extremely important, I do have a broader question. I wonder whether our model, or system, of accounting is keeping pace with an economy that is rapidly changing and whether changes to the existing system will accurately reflect the financial position of a company.

The question raises more serious concerns when placed in context of the international standards. Obviously, achieving universally acceptable standards that provide efficiency and comparability across borders has undeniable merit. Although I would like to think accounting standards and the structure of the IASB would be free from politicization, we have seen difficulties arise in many efforts to reach global agreements with our foreign counterparts. I support the structure and process, and perhaps the fact it is private will reduce potential hurdles. Nonetheless, I have several questions regarding the impact of international standards on US businesses and US GAAP standards. Transparent international standards will be an invaluable change, but only if it is available to all businesses.

Finally, I would be remiss, if I didn't raise the issue of Pro- forma vs. GAAP [generally accepted accounting principles] reporting of financial data by publicly traded companies with today's witnesses. I find value in both types of reporting. Yet, I would like to see two things transpire regarding pro forma reporting. First, some level of standardization should be applied to pro forma reporting, so that an individual investor, such as myself, could make heads or tails out of them. I think the FASB can play a constructive role in this regard. I do appreciate that pro forma reporting should be flexible enough to be responsive to a particular company's or industry's dynamics. Yet, if every company comes up with its own definitions, the utility of pro forma reporting is diminished for a small investor, as he or she has no frame of reference to compare the pro forma results with. This takes me to my second point on the matter. The pro forma statements, I believe, should be released simultaneously with a company's 10Q filing with the SEC. The simultaneous release of those results will accord a small investor the opportunity to truly understand and appreciate the pro forma results. Furthermore, I would recommend that each company provide for a comprehensive reconciliation table between its pro-forma and 10Q reported results. I think this issue is of substantial import to the small investor and I think the FASB has a key role in adding some structure to pro forma reporting.

In conclusion, I would add that our accounting standards are the best in the world and I respect FASB for their efforts to constantly improve them in the face of changing world economy. I look forward to continuing our dialogue with the FASB and IASB and look forward to their testimony.