FEI.

ISSUES/ADVOCACY

CFRI 2000

The Current Financial Reporting Issues (CFRI) Conference, held Nov. 6-7 in New York, with over 500 attending, was kicked off with the announcement of FEI's name change and new logo -- fitting changes at a meeting that echoed with news and comments about international accounting standards and attempts to harmonize global financial reporting. Some highlights of the two-day event follow.

In a short and informal opening keynote speech, Frank Zarb, chairman of the National Association of Securities Dealers (NASD) and chairman and CEO of Nasdaq, infused a sense of history into an overview of the financial markets and the changes sweeping over them. Zarb, a former official in several Republican administrations and CEO of Smith Barney, recalled when he started on Wall Street -- in the days before fixed commissions -- trading amounted to "rich guys selling stock and bonds to other rich guys." Now, markets have been democratized, are global and around-the-clock.

Information technology has transformed the trading of securities in enormous ways, Zarb said, with Nasdaq at the forefront of those changes. Time and again, Zarb reiterated two realities: markets move quickly and are hungry for information. "The market will get what it wants, when it wants it and without you," he told the FET audience. Even today, he said, Nasdaq and other leading exchanges could be disintermediated by new entities that give investors better information,

Integrity of information is critical, Zarb said. "Tomorrow's markets will link global pools of liquidity with integrity." He argued that international regulators need to work harder at harmonizing standards and enforcement and noted that little is done outside the U.S. on issues like insider trading. "Integrity is integrity -- you know it when you see it," Zarb said.

* In the conference's first general session on the financial implications of new business trends, Thomas Pizzutti, director of strategic finance at Internet incubator CMGI, argued that investors are now demanding that Internet companies speed up their life cycles -- that they demonstrate more quickly that they can have cash flows, can be valued and can indeed be profitable. Pizzutti added that goodwill issues are "enormous" for Internet companies, noting that goodwill is frequently amortized over very short periods, often as little as three years.

* Mary Pat McCarthy, vice chair for information, communications and entertainment at KPMG, said that from the auditing perspective, there has been more change in the past year than any of the past 23 she has been in the accounting arena. Audit clients want more for less, she noted, adding that auditors must turn increasingly to...