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Technology Stocks : Y2K (Year 2000) Stocks: An Investment Discussion -- Ignore unavailable to you. Want to Upgrade?

To: Done, gone. who wrote (7666)	11/9/1997 12:53:00 AM
From: C.K. Houston	Read Replies (2) \| Respond to of 13949

SEC: If WE don't do something, WHO will? ... We need action NOW ============================================================== CONGRESSIONAL BANKING COMMITTEES TO SEEK Y2K LEGISLATION In a day which saw three Year 2000 hearings on Capitol Hill, two lawmakers announced plans to offer legislation directed at the issue. One bill would force more open disclosure on Year 2000 by public companies; a second would give financial institutions liability protections under certain conditions. Sen. Bob Bennett, (R-UT), Chairman of the Senate Banking Subcommittee on Financial Services and Technology, held a November 4 Year 2000 hearing and testified himself at another. He criticized the efforts to date of arguably the most Y2K proactive group in official Washington, the financial regulatory agencies: "What troubles me most about the Year 2000 Problem ... is the lack of accessible information about the readiness of specific banks and other businesses. In response to questions about how customers should go about obtaining information about their particular financial institutions, the regulators have suggested that they simply ask. I find that answer singularly unhelpful and wholly inadequate." Bennett said that without specific disclosure, individual investors must make their own investigations on whether or not to invest in a particular company. He said he is surprised that more mutual fund managers haven't weighed in on the issue, professionals who, he noted, "are quite frankly flying in the dark on.whether or not the companies in which they invest may be in serious Year 2000 related trouble. Apparently rejecting as progress a recently released Securities and Exchange Commission staff bulletin clarifying the obligation of public companies to make Year 2000 disclosures, Bennett said the SEC is "getting dangerously close to dropping the ball on this matter by allowing most of the publicly traded companies to get away with next to nothing by way of disclosure." Bennett intends to short-hop the Y2K issue with a bill which would require corporations to disclose their correction progress by phase and by division, department or other appropriate business unit. The bill would also force disclosure on likely litigation costs and liability outlays, whether by breach of contract, tort, shareholder class action or product liability suits. Companies would be required to come forward on their insurance to cover specific Y2K claims and to explain whatever contingency plans they have in place. Rep. James Leach, Chairman of the House Committee on Banking and Financial Services, seemed more intent on offering companies a bit of cover, at least for institutions making a good faith effort on their Y2K programs. Leach said his proposed bill would authorize federal banking agencies to waive any civil monetary penalties and "work towards reducing any damages" federal courts might impose for inadvertent Y2K-related technical violations of law. "Despite reasonable efforts by institutions to correct all Year 2000 issues it seems inevitable that some unforeseen problems will arise, and if institutions correct them on a timely and forthright basis upon discovery it does not seem reasonable that they be held liable," Leach said. He called the provision an attempt to provide statutory clarification of current law and not an attempt to indemnify institutions for negligence. Other provisions of the Leach bill would amend federal copyright laws to allow regulated financial institutions and Y2K vendors to copy temporarily computer software for the sole purpose of century compliance corrections if permission from the software publisher isn't forthcoming in a timely manner. It would also give the Office of Thrift Supervision the same regulatory authority as other banking agencies to oversee service corporations or vendors providing "Year 2000-sensitive services" to thrifts. SEC CHAIRMAN AIRS CONCERNS An October 22 letter from Securities and Exchange Commission Chairman Arthur Levitt says preparing for the Year 2000 should be the highest priority of securities firms. The four paragraph correspondence expresses Levitt's Y2K concerns and notes that "While many transfer agents have already begun to address this issue, I want to stress how important it is that all transfer agents currently be implementing plans and devoting adequate resources to modify their computers." The Chairman urges that all necessary modifications be in place by year end 1998, allowing participation in industry-wide system testing in 1999. CK HOUSTON SIDEBAR: SEC's already talked about a "2 day holiday", Montgomery Securities projects 3 days, and independent study done by a UK research group says the stock market will be down 3 weeks! Who's telling the truth? AUDITORS GAIN GUIDANCE Attention auditors. The American Institute of Certified Public Accountants (AICPA) has released "nonauthoritative guidance" for those involved in "planning and performing audits of financial statements in the years leading up to the year 2000." The Year 2000 Issue - Current Accounting and Auditing Guidance can be downloaded from the group's web site at aicpa.org AICPA's Audit Issues Task Force (AITF) expects to release additional guidance by June on the Y2K applicability of its Statement on Auditing Standards (SAS) No. 59, The Auditor's Consideration of an Entity's Ability to Continue as a Going Concern. The current document covers generally accepted accounting principles (GAAP) and SEC reporting and disclosure requirements as related to the date change; auditor disclosure responsibilities in audited financial statements or management's discussion and analysis of financial condition and results of operations (MD&A); financial statement audit preparation; client communication; and client acceptance and continuation procedures. The document reiterates the Emerging Issues Task Force position that Y2K modification costs should be charged to expense as incurred. Beyond this particular accounting practice, the new publication raises a series of interesting issues. The amount and timing of revenue recognition for software transactions may come into play in customer acceptance, customer cancellation privileges, and other factors. "The Year 2000 Issue also may create product-warranty or product-defect liability and product return issues for software and hardware vendors or software providers, as well as for other vendors that sell products containing software," the document notes, pointing readers to appropriate accounting standards and statements. Non-compliant hardware inventories may come under standard accounting treatment for impairment losses. Accounting for internal-use software could also be affected. Disclosure concerns identified include impairment or amortization of capitalized software costs, inventory valuation, long term contract accounting, warranty reserves, reserves for sales returns and the like. The AITF notes that Year 2000 may affect far more than accounting systems or the presentation of financial statements. Auditors audit financial statements to provide reasonable assurance that these are free of material misstatement, "whether caused by the Year 2000 Issue or by some other cause." The AITF indicates that the auditor does not need to report perceived Y2K problems in the preparation of future financial statements. Internal control deficiencies become reportable when such problems could impair the ability of the organization to "record, process, summarize and report" financial data for financial statements. ITAA's Year 2000 Outlook, November 7, 1997: Volume 2, No. 42 Published by the Information Technology Association of America, Arlington, VA =================================================================== WRITE YOUR CONGRESSMEN & SENATORS Congressional Email Addresses visi.com geocities.com Senate Email Addresses earthlaw.org Clinton's & Gore's email addresses whitehouse.gov *ASK WSJ, BARRONS, IBD, ETC. WHY* THEY'RE NOT REPORTING THIS We need email addresses for ALL types of media (including the above). Anyone who has links to put on a Master Index, email me at: Quest@hypercon.com** We need several formatted letters. Post at this link or email me. I'll pull the pieces together: exchange2000.com Post this thread on other threads you participate in exchange2000.com Post this particular link on other threads you participate in Send this to your CPA, your broker, your banker