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. The AICPA will vigorously oppose any such efforts to impair the independent accounting standard setting process.
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.
Nov. 18, 2009 AICPA Opposition to the Perlmutter/Lucas Amendment Undermining Accounting Standard Setting
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
Director – Congressional and Political Affairs