Thank you, Mr. Chairman for conducting this hearing.  Enron, WorldCom, and other corporate governance failures demonstrate the dangers of not having independent accounting and auditing standards.  The landmark Sarbanes-Oxley accounting reform legislation included a provision that strengthened the independence of the Financial Accounting Standards Board (FASB) by providing a more secure funding mechanism, through mandatory assessments on publicly traded companies.  FASB is intended to be independent and make the accounting rules on the basis of its judgment.

 Now that FASB has proposed that all forms of share-based payments to employees, including stock options, be treated the same as other forms of compensation by recognizing the related cost in the income statement, the reinforced independence of FASB will be tested.  If Congress interferes with the FASB proposal, the dangerous precedent of intervention into accounting standards will be set.  Congressional interference is detrimental to the independent nature of FASB and the accounting treatment of stock options is a matter best left to FASB to determine.

 We must have an independent organization establishing standards of financial accounting and reporting in an open environment that is fair and objective.  These standards are essential to investors having access to transparent and understandable information.  The Securities Exchange Act of 1934 provides the Securities and Exchange Commission (SEC) with authority over financial accounting and reporting standards for publicly held companies.  Throughout its history, the SEC has relied on the private sector for this critical function.  We must protect the integrity of the standards developing process and exercise Congressional restraint on this matter to ensure that FASB is allowed to pursue policies that it considers to be in the best interests of the public.

 I thank the witnesses for appearing today.  Thank you Mr. Chairman.