WASHINGTON - A decision to bar merging companies from using the pooling-of-interests method of accounting may not be set in stone.

Despite the release of a formal proposal last September, Financial Accounting Standards Board Chairman Edmund Jenkins told the Senate Banking Committee Thursday that a final decision has not been made on the issue.

"Our door is still open," Mr. Jenkins said.

His stance was surprising considering how adamantly he has supported the move in the past.

After holding four days of hearings on the proposal and receiving nearly 200 comment letters, Mr. Jenkins said the FASB will take some time to evaluate the feedback. "Our next step is to evaluate the comments and public hearing testimony, including the testimony at today's Senate hearing, and revisit each of the issues in our proposal in light of this extensive input," he said.

In fact, Mr. Jenkins said the FASB will hold still more public hearings.

Senate Banking Committee Chairman Phil Gramm opposes the FASB plan to require companies merging after Jan. 1, 2001, to account for the transaction using the purchase method. Of the nine witnesses at Thursday's hearing, eight opposed the plan.

Witnesses argued that purchase accounting's method of amortizing goodwill - that is, writing off as an annual expense the difference between the price paid for an acquisition or merger and the book value of the acquired company's net assets - would artificially reduce earnings.

Sen. Gramm suggested an alternative.

"It seems to me that there ought to be a way, when one company acquires another, to allow the company that is acquiring take the purchase price, whatever difference that is compared to the real physical assets that are acquired, and book that as goodwill," he said.

"We should then set up a systematic review process over time where that goodwill is evaluated, and if it diminishes, force the company to write it off. It seems to me that that would be a much better window on the real world than what we're talking about here."

Mr. Jenkins said the FASB is "taking a look" at that option. But he insisted that most acquisitions overstate the value of goodwill. "Most of the goodwill that exists today diminishes very rapidly," he said. Under purchase accounting, goodwill is amortized over a period of at most 20 years.

Harvey Golub, chairman and chief executive of American Express Co., urged the FASB to "postpone any action."

"The most basic flaw with the proposal is the FASB presumes that goodwill must be written off," he said. "The assumption is that it will lose value even though we continue to take the same type of positive actions that created it in the first place."

Mr. Golub added that the FASB's plan to ban pooling-of-interests accounting will reduce the number of mergers and acquisitions and slow the economy.

Sen. Gramm also questioned how much influence securities regulators are having over the FASB rule. "I continually question the independence of the setting of these standards," he said. "I think the Securities and Exchange Commission has too much to do with the setting of these standards."

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