The media may have called him the "wishy-washiest watchdog since Scooby-Doo," but Securities and Exchange Commission (SEC) Chairman Harvey Pitt is talking tough about reforming accounting standards. If he follows through on this tough talk, the Financial Accounting Standards Board (FASB) may be in for big changes.

Speaking on May 24, 2002 at a general meeting of the Investment Company Institute, Chairman Pitt said, "The challenges we collectively face are dramatic. . . We must not delay in addressing the critical need to effect a massive restructuring of the regulatory regime that governs our capital markets." He went on to describe the way the restructuring will affect the accounting standards set by the FASB.

Going forward, Chairman Pitt said, the SEC plans to:

• Broaden funding sources and make funding involuntary.
• Meaningfully participate in setting the agenda of the FASB.
• Exercise SEC's authority to review adopted standards.
• Ensure that FASB promulgates principle-based standards, which adapt faster to changing business environments and emphasize overall accuracy and completeness.

Since legislative reforms have stalled in recent weeks, Chairman Pitt's plans have taken on increased significance for both the FASB and the new Public Accountability Board that he has proposed to oversee auditors. Chairman Pitt said he hopes to have the new regulatory system in place before year-end.

Get the facts behind FASB's funding controversy.

-Rosemary Schlank