The federal government agreed to help out the Public Company Accounting Oversight Board (PCAOB) with emergency funding until the new fee-based system is in place. But members of the board may have to take pay cuts for awhile. The Financial Accounting Standards Board also faces funding delays and is coping by dipping into reserves.
Last week in Washington, the Senate approved a measure that would cut the $452,000 annual salaries of PCAOB members to $400,000 or less because the board members are, in effect, federal employees for now, and anything more would leave them earning more than President Bush.
The pay cap was proposed by Sen. Barbara Boxer as an amendment to a government spending bill. "These commissioners have important work to do," said Sen. Boxer in a statement. "But the idea that they should make more than the president is ridiculous."
The annual salaries of $452,000 per board member had been set to achieve pay parity with the members of the Financial Accounting Standards Board (FASB). Like PCAOB, FASB is still waiting for its funding. So far FASB members have not had to take pay cuts, but their parent organization approved an emergency transfer of reserves last week in New York. The total transfer was in the range of $3 million.
"We needed the funds transfer to meet the payroll," said Joe LaGambina, executive director of the Financial Accounting Foundation (FAF). Manuel Johnson, chairman of FAF, explained the cash shortfall is a matter of timing. FASB had expected to start receiving funds from the new fee-based system as of the first of the year, but now it appears the funds may not be forthcoming for some time, perhaps not until the end of the first quarter.
In the meantime, contributions from companies and accounting firms have dwindled off. Audit Committee Chairman Judith O'Dell said the Foundation was concerned about its ability to rely on further contributions from the American Institute of CPAs (AICPA).
A spokesperson for AICPA told AccountingWEB, "The new law requires FASB through the FAF to be funded by public companies and not the profession. The AICPA has annually raised about $3 million from the firms which is paid over to the FAF. Monies collected through December 31, 2002 are, of course, being sent to FAF. However, on advice of the FAF, the AICPA is not soliciting new funds from firms for the benefit of FASB after January 1, 2003. We will continue to solicit funds for GASB."