New York-Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, re-assured attendees at the American Accounting Association's recent annual meeting that he had no intention of legislating accounting standards.
Asked about a congressional hearing that he attended in March in which Financial Accounting Standards Board Chairman Robert Herz was told that he needed to revise mark-to-market and fair value accounting standards in three weeks' time, Frank said that the subcommittee was only exerting pressure, but not trying to legislate accounting standards.
"At that same subcommittee hearing, I announced that as long as I was chairman of the committee, we would never consider any legislation to mandate changes in accounting," he said. "I've taken that position consistently." He noted that he had some concerns about mark-to-market and fair value accounting and wanted the standards changed, but as chairman of the committee, he had the power to stop other lawmakers from making legislative changes to accounting standards by setting the agenda. "We will never legislate accounting while I'm chairman," said Frank. "That's not going to be forever," he quickly added.
Another member of Frank's committee, Rep. John Campbell, R-Calif., agreed that Congress should not be legislating accounting standards. "We do not want to be politicizing accounting standards," he said. "That will be a disaster. ... All sorts of things can get involved when you politicize accounting, so the last thing in the world I want to see is us making accounting rules, because we will make them for the wrong reasons."
Campbell said that he only wants Congress to oversee the process by which accounting rules are made. He noted that he has "a lot of issues" with International Financial Reporting Standards, but he believes that accounting has become too rules-based. "You put everything in a rule so you don't get sued," said Campbell. "If I meet the rule, I don't get sued. Other countries, because they have a different litigation set-up, are more principles-based."
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