Thomas Jefferson once declared that, “Given the choice of a government without newspapers, or newspapers without government," he would not hesitate a moment to prefer the latter.
In another century, two of England’s most abundant resources were fish and coal. Then came a sweeping election in which, among myriad changes, the government assumed control over procuring and supplying both.
Care to venture a guess what two things were in dangerously short supply just a few scant years later?
As you can guess, I’m not imbued with confidence in any government’s ability to run things without incident or unnecessary cost.
Now, those above-mentioned events occurred more than a few years before the creation of the Financial Accounting Standards Board in 1973, so the Jeffersonian philosophy and that bumbling Anglo administration obviously were prior to the advent of modern accounting standards.
Therefore you can imagine my feeling about Uncle Sam elbowing his way into accounting matters.
Which, in essence, is exactly what happened last week when lawmakers sided with the nation’s technology companies and assorted remoras in the form of special interest groups and lobbying factions in passing a reform measure that basically defers the expensing of options.
The bill, H.R. 3574 — the Stock Option Reform Act — proposes that only the stock options paid to a company’s top five executives be expensed. It also defers options expensing for newly public companies for a period of three years.
This not only threatens FASB’s options expensing proposal, which mandates treating all employee options as an expense, but endangers its core as the independent standard-setter.
Funny how an election year, and plenty of soft campaign money, affects common sense — not to mention memories.
For those who need a jolting reminder, the House vote came just shy of the two-year anniversary of the passage of Sarbanes-Oxley.
Now, imagine this vote coming in 2002 amidst the ruins of Enron and WorldCom and you sort of get my point.
And here’s a kicker: the co-author of Sarbanes-Oxley, Rep. Michael Oxley R-Ohio, voted for the diluted measure, proving beyond a doubt that any real “teeth” in SOX were actually authored by Sen. Paul Sarbanes, D-Md.
Rep. Richard Baker, R-La., who introduced H.R. 3574, has been quoted as calling the measure “a common sense compromise.”
Others, like Sen. Richard Shelby of Alabama, chairman of the Senate Banking Committee, and several colleagues, have probably labeled Baker’s bill in terms that cannot be reprinted here and have banded together in an attempt to block it.
Two years ago, there was an abundance of what Warren G. Harding used to refer to as “bloviating” about cleaning up corporate scandals and calling for more transparency in financial reporting.
If Congress somehow wins this battle and succeeds in usurping FASB’s independence in some degree, I trust it won’t be long before we see a refreshing new wave of corporate mistrust.
Sadly, governments are nothing if not predictable.
