M E M O R A N D U M

TO:	Files
FROM:	Anita Klein
DATE:	June 12, 2002
RE:	Release Nos. 33-8098; 34-45907; International Series Release No. 1258 File No. S7-16-02

On June 7, 2002, Commissioner Glassman, Alan Beller (Director of the Division of Corporation Finance) and other members of the Division of Corporation Finance staff met with representatives of the American Society of Corporate Secretaries about, among other topics, the proposed disclosure in Management's Discussion and Analysis (MD&A) about companies' critical accounting estimates and the initial adoption of material accounting policies. During the meeting, ASCS members (including Broc Romanek who acted as the ASCS spokesperson on this issue) indicated that they were still in the process of considering, and had not formulated final views on, these proposed Commission rules. The ASCS spokesperson also provided the staff with a copy of the attached flowchart reflected his understanding of the proposals. In explaining some preliminary thoughts on the proposals, the ASCS:

• discussed the fact that the proposals were more detailed requirements in contrast to some of the more general requirements in existing MD&A;

• noted some concern about the potential for liability when there is forward-looking information involved in disclosure (particularly quantitative information);

• noted that there could be a potential for harm with respect to quantitative disclosures relating to accounting estimates in connection with pending litigation;

• expressed concern that the length of the critical accounting estimates disclosure could overwhelm the rest of the MD&A and make the rest seem less important.

The ASCS also suggested the Commission consider whether some or all of the proposed disclosure should be made by the auditors rather than company management in MD&A.

The ASCS indicated that they were aware of the section of the MD&A proposing release discussing plans for future revisions to MD&A disclosure. The ASCS agreed with the Commission's position that MD&A disclosure needs to be fixed. The ASCS suggested that the Commission consider doing those revisions in one large MD&A release.

Attachment A: Quarterly Assessment of Accounting Estimates

Attachment B: Disclosure Decision Tree