Past year's successes set up new year's opportunities.

The start of 2007 marks the mid-point of my tenure as FEI Chairman and affords the opportunity to update you about some key initiatives. As always, there is much to be proud of what we have collectively accomplished. Let me highlight just a few of these accomplishments from 2006.

Last year marked FEI's 75th Anniversary, commemorating the occasion in December 1931, when eight corporate controllers met in New York to lay the foundation of our organization. FEI set out to pay proper tribute to our founding, beginning with a year-long "look-back" series in Financial Executive, entitled FEI@75. Our capstone event came to fruition this past November, as Frank Borelli, F. Gorham Brigham Jr., Dennis Beresford, Robert Moore and Charles Noski were elected to the inaugural class of the FEI Hall of Fame and feted at the Rainbow Room in Rockefeller Center. We will look to build on this first-class event in the future.

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Let's take stock of some of the important work done by FEI's technical committees. At any given time, our committees track dozens of issues of significance to financial executives and represent FEI's views before Congress, FASB, PCAOB and others. Here is a quick capsule of some accomplishments to date:

* Rating Agency Reform. Our Committee on Corporate Finance successfully persuaded policymakers to include conflict of interest language in the recently enacted credit rating agency reform legislation (H.R. 2990/S. 3850). The language prohibits agencies from offering certain consulting services to rated clients.

* Corporate Tax. Our Committee on Taxation persuaded Congress to drop the CEO income tax certification proposal from additional consideration. The committee also urged Congressional leaders to complete work on the package of expiring tax provisions during the lame-duck session.

* Government Contracting. The Committee on Government Business joined a coalition supporting legislation (S. 2821) that would repeal the 3 percent withholding tax planned on payments to government contractors. The committee is also working with policymakers and regulation writers to ensure that the final pension reform regulations treat government contractors fairly.

* Financial Reporting. Our Committee on Corporate Reporting filed a comment letter to the SEC on anticipated management guidance for internal control reporting. It suggested that the guidance focus on examples for designing an appropriate top-down, risk-based approach to implementing Section 404.

* Finance and Information Technology. Members of this committee participated on the Financial Accounting Foundation's XBRL Advisory Committee and the IT Governance Institute's project on IT Controls for Sarbanes-Oxley, which has been published recently. The committee also assisted Financial Executives Research Foundation (FERF) in preparing the upcoming annual technology survey.

* Private Companies. Our Committee on Private Companies held its first Capitol Hill "fly-in" with several Congressional staff members. They discussed CPC's top three issues: the repeal of the estate tax, small business health plan issues and S Corp legislation.

* Benefits Finance. As the Pension Protection Act was passed into law last August, the Committee on Benefits Finance played an integral role in shaping the discussion on credit balances, hybrids, smoothing and transition.

An important member benefit continues to be the original research from FERF. Over the past six months, FERF has published 18 research reports, alerts and articles, including a survey on income tax disclosures and a top-down approach to risk management and internal control, based on input from technical committees and chapters. In development are new FERF projects, including an executive compensation study, a compliance checklist for the Pension Protection Act and a review of different approaches to cost accounting.

Looking ahead to the new year, we anticipate the appointment of a successor to FEI's CEO and President Colleen Cunningham (still unknown as we go to press). Colleen's contributions to FEI are many (including her words of wisdom in this space in previous issues), and I personally wish her continued success. Our new CEO will inherit the resources of a strong professional staff, as well as active, involved guidance from our national leadership.

He or she will also benefit from the work advanced in two areas, membership development and branding. This past fall, an ad hoc committee has examined various ways to increase membership, including reviewing criteria and other strategic issues, and will present recommendations to the Board in the new year. Additionally, FEI has engaged the nationally recognized firm of Penn, Schoen & Berland to help us assess FEI's brand and enhance its value in the marketplace. We appreciate that many of our members have given their views to PSB. Their findings will be shared with the Board and leaders at the February area leader meetings.

I am privileged to serve as your Chairman during this special time in our history. Stay tuned for much more in 2007, and I look forward to meeting many of you at our annual Summit in Boston.

Richard Schrader, Chair, 2006-7