The main council that provides guidance to the Financial Accounting Standards Board doesn’t agree that the accounting profession’s rulemaking structure is in need of reshaping.

At a meeting of the Financial Accounting Standards Advisory Council earlier this week, council members reached a consensus that they disagreed with recent views expressed by former Securities and Exchange Commission Chairman Arthur Levitt Jr. In a recent Wall Street Journal editorial, Levitt said that both FASB and its sister board, the Governmental Accounting Standards Board, should be restructured.

In his March 9 opinion piece, Levitt said that in order to protect “the privileged position” of U.S. capital markets, the organizations responsible for setting accounting standards needed to be reinvigorated and re-engineered. He added that while both boards are devoted to creating a strong financial reporting system, intense interest-group lobbying has delayed action and severely compromised stock-option expensing, pension accounting rules, and, potentially, lease accounting standards.

“When the FASB falls prey to these compromises, the resulting standards can end up being overly complex and confusing,’’ wrote Levitt, who served as SEC chairman from 1993 to 2001. “[Accounting complexity] is rooted in the structure of the FASB and GASB.”

Levitt suggested that the SEC be responsible for naming the 16 trustees of the Financial Accounting Foundation in an open-nomination process. Those trustees appoint members and set the budgets for both boards.

Levitt had not spoken publicly on the matter since his March 9 letter was published.

Summaries of other issues discussed at the council meeting are available at www.fasb.org/fasac/03-20-07_fasac_handout.pdf.

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