Norwalk, Conn. (June 16, 2004) -- Responding to congressional backlash over the Financial Accounting Standards Board's proposal to require stock option expensing, the trustees of the Financial Accounting Foundation, the group responsible for overseeing, funding and selecting the members of FASB and the Governmental Accounting Standards Board, voiced its opposition to legislation it says would curb FASB's independence.
A bill sponsored by Rep. Richard Baker, R-La., that would restrict the expensing of options to a company’s top five officers, passed the House Financial Services Committee Tuesday. The bill now moves on to a full House vote.
"We do not take positions on FASB's standards-setting proposals; we leave the complex task of accounting standards setting to the experts who comprise FASB," the trustees wrote in a statement issued this week. "However, we care deeply about the integrity and independence of the standards-setting process, which we believe is threatened by current legislative proposals."
"We, therefore, strongly oppose any current or proposed legislation that would undermine the independence of FASB by preempting, overriding, or delaying FASB's ongoing effort to improve accounting for equity-based compensation," the statement continued. "We believe that once Congress starts setting accounting standards through its political process, the integrity of U.S. accounting standard-setting and the credibility of U.S. financial reporting will be dangerously compromised. If Congress sends the message that special interests are able, through legislation, to overturn expert accounting judgment arrived at through open and thorough due process, necessary and timely improvements in financial reporting will likely become impossible.
In addition, the trustees said such legislation "will severely impede" efforts by the FAF trustees and FASB to achieve international convergence on accounting standards.
"We … strongly urge Congress to reject proposals that would thwart and supplant FASB's process for establishing accounting standards for employee stock options or any other topic," the statement concluded.
The 16-member FAF Board of Trustees includes PricewaterhouseCoopers chief executive officer Samuel DiPiazza Jr.; KPMG chairman and CEO Eugene D. O'Kelly; Colgate-Palmolive Co. chief financial officer Stephen C. Patrick; Baruch College president Ned Regan; and Edward W. Kelley Jr., former governor of the Federal Reserve System.
-- WebCPA staff
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