House maintains FASB independence

Strong lobbying by the AICPA and the Center for Audit Quality (CAQ), supported by OSCPA efforts, succeeded in blocking language in an amendment to the proposed Financial Stability Improvement Act (FSIA) (H.R. 3996), reaffirming the value of FASB’s independence in accounting standard setting.

Last week, the House Financial Services Committee voted to adopt an  amendment that would allow a proposed systemic risk regulator created by the bill to comment, just as other interested parties do, on FASB standards-setting issues.

The vote is a victory for the AICPA, CAQ, OSCPA and other state CPA societies vigorously opposed to a change in the current due process for standard setting. The original amendment, introduced by Rep. Ed Perlmutter, D-Colo., would have transferred authority for standards oversight away from the SEC and to a new regulatory body with a mandate to more actively engage in the process.

Opponents recognized the amendment could lead to systemic risk in the American financial system since it effectively put bank regulators in control of U.S. accounting standards.

“The [Financial Accounting Foundation, the legal entity that oversees FASB] does not oppose the recently adopted Perlmutter amendment because it acknowledges the due process of the accounting standards process, which is the backbone of the FAF mission,” Neal McGarity, FAF’s director of communications said Friday. “The FAF recognizes and is respectful of the need for Congress to maintain and advance the safety and soundness of this country’s financial system.”

A vote on the entire FSIA bill by the House Financial Services Committee could come by Dec. 2.

Read the full story in the Journal of Accountancy.

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