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Home Advocacy Federal Issues FASB Independence and Fair Value Accounting

Federal Issues

FASB Independence and Fair Value Accounting 

The AICPA strongly and unequivocally supports independence of the U.S. and international accounting standard setting bodies, the Financial Accounting Standards Board in Norwalk, Connecticut, and the International Accounting Standards Board in London.  Maintaining the independence of FASB and the IASB in keeping the accounting standard setting process free of political interests is one of the AICPA’s top priorities.

Periodically, interest groups urge Congress to legislate accounting standards.  Most recently, the American Bankers Association and others have expressed concern regarding the impact of fair value, or mark-to-market accounting standards, when applied to financial institutions.  They argue the use of mark-to-market standards could impact on bank capital requirements, and impinge the ability of banks to lend money under some economic circumstances.  

The accounting profession believes this debate wrongly confuses the roles of accounting standards setters and the Securities and Exchange Commission with the role of regulatory supervisors of financial institutions.  The profession believes it would be a significant mistake – and unnecessary – for Congress to subvert the role of the SEC, FASB and public financial reporting in general by undermining fair value accounting standards. The primary objective of accounting is to meet the needs of investors and capital markets with transparent financial information.  It is the role of financial regulators to provide prudential oversight of financial institutions to foster institutional safety and soundness, and financial stability. 

The AICPA successfully opposed amendments to what became the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) that would have legislated fair value accounting.  Ultimately, language was offered and accepted that directs the Financial Stability Oversight Council to “monitor domestic and international financial regulatory proposals and developments, including insurance and accounting issues, and to advise Congress and make recommendations in such areas that will enhance the integrity, efficiency, competitiveness, and stability of the U.S. financial markets.”   The Council is also expected to review and, as appropriate, may submit comments to the Commission and any standard-setting body with respect to an existing or proposed accounting principle, standard, or procedure.”  Finally, the Council is required to annually report to and testify before Congress on significant financial market and regulatory developments, including insurance and accounting regulations and standards, along with an assessment of those developments on the stability of the financial system.  These provisions were enacted when the Dodd-Frank Wall Street Reform and Consumer Protection Act became law in July 2010.

The AICPA anticipates that lawmakers will periodically make proposals that would legislate accounting principles during the 112th and future Congresses. The AICPA will vigorously oppose any such efforts to impair the independent accounting standard setting process.

Resources

Copy of Legislation

A copy of the Dodd-Frank Act is available on the Library of Congress's THOMAS website.  The law, and all major Congressional actions leading to passage, are available by using the advanced search function and searching for H.R. 4173 by bill number under the 111th Congress.

Issue Paper

Nov. 18, 2009 AICPA Opposition to the Perlmutter/Lucas Amendment Undermining Accounting Standard Setting 

AICPA Letters

May 7, 2010 Letter to Senate Regarding Brown Amendment #3853 on Financial Reporting; Coalition Letter from Center for Audit Quality, CFA Institute, Financial Executives Institute, Investment Company Institute, US Chamber of Commerce, Council of Institutional Investors and AICPA

February 18, 2010 AICPA Letter to Senate Banking Chairman Chris Dodd and Ranking Member Richard Shelby in Support of Independent Accounting Standard Process

November 4, 2009 AICPA Letter to House Financial Services Committee Chairman Barney Frank and Ranking Member Spencer Bachus opposing the Perlmutter/Lucas amendment 

November 13, 2009 AICPA Letter to House Financial Services Committee Chairman Barney Frank and Ranking Member Spencer Bachus opposing the Perlmutter/Lucas amendment

Other Legislative Letters

November 5, 2009 CAQ, CII, ICI and U.S. Chamber send joint letter to Congress in support of standard-setting independence

Staff Contact

Peter Kravitz
Director – Congressional and Political Affairs
202-434-2918
pkravitz@aicpa.org

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Tax Legislation and Policy - Recent Issues

Article :  The Congressional and Political Affairs Team often assists the Tax Team with tax legislation and policy issues, and advocates about them to Members of Congress and other key policymakers on behalf of the profession.  Below are several significant current
Published on May 15, 2012

Tax Strategy Patents

Article :  On September 16, 2011, President Obama signed the America Invents Act, which contains a provision that eliminates the patenting of new tax strategy patents. The AICPA strongly supported this legislation and worked towards i
Published on May 15, 2012

Federal Legislative and Regulatory Issues

Federal Law :  This page highlights the advocacy issues in which the Congressional & Political Affairs Team is advocating on behalf of the profession, and also those issues that the team has recently followed.
Published on May 15, 2012

Tax Legislation and Policy

Article :  The Congressional and Political Affairs Team often assists the Tax Team with tax legislation and policy issues, and advocates about them to Members of Congress and other key policymakers on behalf of the profession.
Published on May 15, 2012

XBRL

Article :  Extensible Business Reporting Language (XBRL) used in financial and other reporting allows for easier access to more transparent information.  AICPA supports legislative proposals to utilize XBRL by companies, Federal agencies and recipients of Federal funds.
Published on May 14, 2012

Registration and Inspection of the Auditors of Broker-Dealers

Article :  The Dodd-Frank Act provides authority to the Public Company Oversight Board to expand, by rule, its oversight and inspections to all auditors of broker-dealers or to a targeted subset of its choosing. The AICPA continues to advocate for a clear policy rationale to any changes in PCAOB regulation.
Published on May 14, 2012

Financial Literacy and Education

Article :  The Congressional and Political Affairs team regularly works with lawmakers and federal officials to promote financial literacy through all stages of life.  In particular, the team supports legislative and executive branch efforts, such as those thr
Published on May 14, 2012

Extraterritorial Private Rights of Action, also known as F-Cubed Litigation

Article :  The accounting profession believes private litigants may utilize U.S. securities laws within the territorial jurisdiction of the U.S. and that the United States Supreme Court decision in Morrison v. National Australia Bank, Ltd. is the correct reading of the Securities Exchange Act of 1934.
Published on May 14, 2012

Interstate Taxation/Mobile Workforce Bill

Article :  The AICPA is supporting legislation that would reduce the tax burden and compliance requirements related to nonresident state income tax withholding laws.
Published on May 12, 2012

AICPA Advocacy

Overview :  The AICPA monitors and advocates on legislative and other matters that affect the accounting profession. Working with state CPA societies and other professional organizations, the AICPA provides information to and educates federal, state and local policymakers regarding key issues.
Published on April 05, 2012

Section 404(b) of Sarbanes-Oxley Act of 2002

Article :  The Sarbanes Oxley Act requires that the management of public companies assess the effectiveness of the internal control of issuers for financial reporting.  Section 404(b) requires a publicly-held company’s auditor to attest to, and report on, management’s assessment of its internal controls. AICPA believes that all investors in public companies
Published on April 05, 2012

Letter to Senate regarding accounting and auditing standards for public companies

Legislative Letters :  Letter to Senate regarding accounting and auditing standards for public companies, March 19, 2012.
Published on April 03, 2012

Letter from SEC Chairman Mary Schapiro to Senators Tim Johnson and Richard Shelby regarding the JOBS Act

Legislative Letters :  March 13, 2012 Letter from SEC Chairman Mary Schapiro to Senators Tim Johnson and Richard Shelby regarding the JOBS Act.
Published on April 03, 2012

March 22, 2012 CAQ-CII Letter to Senate re JOBS Act

Legislative Letters :  March 22, 2012 CAQ-CII Letter to Senate re JOBS Act
Published on April 03, 2012

FASB Independence and Fair Value Accounting

Article :  The AICPA strongly and unequivocally supports independence of the U.S. and international accounting standard setting bodies, the Financial Accounting Standards Board (FASB) in Norwalk, Connecticut, and the International Accounting Standards Board (IASB) in London.
Published on January 26, 2012

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