Mr. Edmund Jenkins
Chairman
Financial Accounting Standards Board
401 Merritt 7
Norwalk, CT 06856-5116

Re: Draft Standard - Accounting for Derivative and Similar Financial Instruments and Hedging Activities

Dear Sir:

The Treasury Management Association (TMA) respectfully wishes to call to the attention of the Financial Accounting Standards Board (FASB) the difficulties TMA members are experiencing in meeting the effective date for implementation of Financial Accounting Standard No. 133 (FAS 133), Accounting for Derivatives and Hedging Activities. Many members report that their organizations are experiencing critical shortages of systems, programming and management resources due to coping with the Year 2000 (Y2K) problem, and conversion to the euro. Competition for these resources is magnified by the complex and comprehensive systems changes needed to accommodate the fundamental accounting changes required by FAS 133. Therefore, we request that the Board delay the effective date 18 months, to fiscal years beginning after December 15, 2000.

TMA represents approximately 12,000 professionals who, on behalf of over 5,000 corporations and other organizations, are significant participants in the nation's payments systems and capital markets. Many of our members are responsible for their organizations' derivatives activities with the primary objective of risk management. Organizations represented by our members are drawn generally from the Fortune 1000 and the largest of the middle market companies, and they have an active interest and sizable stake in any accounting standards, regulatory and legislative changes affecting financial reporting of derivatives and other transactions. Also, TMA is merging with the End-Users of Derivatives Association (EUDA) effective June 1, 1999. EUDA represents 60 major corporations who are significant users of derivatives.

TMA was an active participant in the proceedings which led to the issuance of FAS 133. We offered several written comments on various proposals during that process, and also testified at Board hearings. We expressed our concerns in an October 13, 1997 letter, regarding the implementation period for a complex standard during the same timeframe when organizations were dealing with Y2K and euro considerations. Members reinforce these concerns now by citing the following factors which argue for delaying the effective date:

• The Derivatives Implementation Group (DIG) is still interpreting FAS 133 issues. It is burdensome to undertake extensive changes to current accounting systems when interpretations of the underlying standard are not yet complete. FAS 133 is very complex and represents an extensive change from current accounting models.
   
• Most organizations have a shortage of resources at this time to dedicate to FAS 133 implementation. Our members report that the commitment to Y2K testing is overwhelming, and they are unable to focus needed skills on FAS 133.
   
• Many organizations have instituted moratoriums on system changes due to the Y2K problem. For these organizations, the time remaining is not sufficient to complete FAS 133 systems and conduct testing. Key federal agencies have recognized this resource shortage and have taken action to facilitate Y2K problem resolution. The Federal Reserve issued a moratorium on systems modifications between October 1, 1999 and March 31, 2000. The Securities and Exchange Commission (SEC) has banned implementation of new Commission rules that would require major reprogramming of computer systems between June 1, 1999 and March 31, 2000. Companies generally have adopted similar restrictions against placing new systems into production during this critical period.

In summary, TMA urges the Board to delay the effective date of FAS 133 until December 15, 2000. The rule is complex, and discussions on interpretation and application of the rule are ongoing, making system definition difficult. Technical resources are in short supply due to Y2K commitments and software suppliers have not yet completed new accounting systems which incorporate FAS 133 requirements. Thank you for your consideration.

Respectfully,

/s/ Nolan L. North, CCM
Chair, TMA Government Relations Committee
Vice Chair of TMA Board of Directors
Vice President and Assistant Treasurer,
T. Rowe Price Associates, Inc.

/s/ Patrick M. Montgomery, CCM, CPA
Chair, TMA Financial, Risk and Accounting Task Force
Member, TMA Board of Directors
Assistant Vice President, Finance, ULLICO