Update On Congressional Consideration Re: FASB
Updating our post last week on Congressional Interest in FASB Oversight, earlier today, FEI's Committee on Private Companies - Standards Committee (CPC-S) submitted its own letter to Congress (see FEI CPC-S letter) on potential amendments reportedly under consideration by some members of Congress that could impact the independence of the Financial Accounting Standards Board.
The FEI CCR letter filed on Nov. 5, signed by CCR chair Arnold Hanish, stated: "CCR is concerned with recent proposals that would place accounting standards oversight under the jurisdiction of a new oversight board. Acting on such proposals to realign oversight of the Financial Accounting Standards Board (FASB), could change the objectives of financial reporting, harm U.S. capital formation, and potentially politicize the process of setting accounting standards....We urge you to reject any efforts to place accounting standard setting under a new oversight board and continue to support independent accounting standard setting in the United States."
The FEI CPC-S letter filed on Nov. 11, signed by CPC-S Chairman William Koch, stated: "We would like to express our support for the recent letter sent by [FEI CCR] and concur that accounting standard setting should remain in the private sector, by an independent accounting standard setter. Additionally, we would like to expand on CCR's points to reflect the unique observations of privately-held companies."
We noted in our post last week that a number of professional associations have filed letters with Congress against any change to FASB oversight or any tying of systemic risk considerations to the accounting standard-setting process, but an alternate view is held by the American Bankers Association as shown in their testimony at a Congressional hearing last month, linked in our Nov. 6 post.
A more colorful (and perhaps, oversimplified) description of the situation can be found in an article by Ryan Grim appearing in the Nov. 6 edition of the Huffington Post, entitled, Civil War in Corporate America: Banks Battling the Chamber on Accounting Rules. In defense of the Huffington Post, however, they do have access to information like the language of the potential amendment which Rep. Perlmutter (D-CO) was said to be considering offering as an amendment to Section 1103 of the House Financial Services Committee's discussion draft of its systemic risk bill. The Huffington Post said they confirmed with Congressional staff the language of the amendment, and the language was consistent with that circulated by the AICPA last week, along with the AICPA's comment letter to Congress arguing against the amendment. In addition, the Huffington Post posted a copy of SEC Chairman Mary L. Schapiro's letter to Rep. Frank; we had cited some excerpts of that letter in our post last week, based on reporting in BNA.
Yesterday, Sen. Chris Dodd (D-CT), Chairman of the Senate Banking Committee, commented on this issue during the Q&A that followed his press conference announcing the release of the Senate Banking Committee's Discussion Draft of the Financial Reform Bill. Asked by a member of the press whether the Senate bill contains any provision to move FASB oversight to a systemic risk council, Dodd responded:
We didn't do that in this bill. We modified FASB back a few years ago, because for years I've resisted, at various times, there's been efforts to Congressionally decide accounting standards; and just as I don't want - and I say this respectfully of our institution in which I serve - having the Congress decide Federal Reserve policy, setting accounting standards is precarious, so we have strengthened FASB to be far more independent; I'm satisfied how that works today.
You can watch a clip of Dodd's comment on YouTube here.
The House is in recess this week, and will continue with its markup of the systemic risk reform bill when it returns next week.
Links to the Senate Banking Committee's Discussion draft, press release, and summary of the Senate Banking Committee's Financial Reform bill can be found in Broc Romanek's post today in The Corporate Counsel.net blog.
Hinchman Appointed FAF Director of External Relations & Communications
In other news, the Financial Accounting Foundation (FAF) - parent of the FASB and GASB, announced earlier today the appointment of Grace L. Hinchman to the position of Vice President, External Relations & Communications. Hinchman formerly served as Senior Vice President, Public Affairs and Technical Activities, at FEI. According to the FAF press release, Hinchman will be based in Washington, D.C.
Separately, the FAF announced earlier this week that the upcoming Nov. 17 FAF meeting will take place in Washington DC instead of at FAF/FASB HQ in Norwalk, CT, and the entire meeting will be closed to the public.
I wonder (and I remind you of the disclaimer on the right side of this blog ) with the FAF meeting moving to DC next week, could there be a Beer Summit in FASB's future? And who else would be on the invite list? (See, e.g.: Obama Convenes Beer Summit, by Michael O'Brien, The Hill.com, 7/30/09.) More seriously...if you'd like to hear the latest news on FASB, SEC, IASB developments, join us at FEI's Current Financial Reporting (CFRI) conference in NYC next week. And follow @feiblog on Twitter https://www.twitter.com/feiblog for upcoming news about a tweetup Monday night.