[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[S. Res. 412 Introduced in Senate (IS)]

  2d Session
S. RES. 412

    Expressing the sense of the Senate regarding the importance of 
maintaining the independence and integrity of the Financial Accounting 
                            Standards Board.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             July 20, 2004

  Mr. Fitzgerald (for himself, Mr. Levin, Mr. McCain, and Mr. Durbin) 
submitted the following resolution; which was referred to the Committee 
                 on Banking, Housing, and Urban Affairs

_______________________________________________________________________

                               RESOLUTION


 
    Expressing the sense of the Senate regarding the importance of 
maintaining the independence and integrity of the Financial Accounting 
                            Standards Board.

Whereas the Financial Accounting Standards Board (FASB) was created in 1973 to 
        establish and improve standards of financial accounting and reporting by 
        publicly traded companies for the guidance and education of the public, 
        including issuers of securities, auditors, and users of financial 
        information;
Whereas the FASB is composed of a diverse, seven-member board of accounting 
        experts representing the private sector, public accounting, academia, 
        and Wall Street, all of whom are specifically qualified to set technical 
        accounting standards;
Whereas the accounting standard setting process of the FASB involves an 
        extensive ``due process'' that is open to public observation and 
        participation;
Whereas on March 31, 2004, the FASB issued a proposed statement entitled 
        ``Share-Based Payment'' that addresses the accounting of share-based 
        payment transactions, including stock options, in which an enterprise 
        receives employee services in exchange for equity instruments of the 
        enterprise, or liabilities that are based on the fair value of the 
        enterprise's equity instruments or that may be settled by the issuance 
        of such equity instruments;
Whereas legislation has been introduced in Congress that would undermine the 
        independence of the FASB by nullifying or delaying ongoing efforts by 
        the FASB to improve accounting for equity-based compensation;
Whereas Congressional action that dictates accounting treatment of stock options 
        by publicly traded companies would inject Congress directly into the 
        accounting standard setting process mandating which types of stock-based 
        compensation should be expensed, how such expenses should be measured, 
        what enterprises should be exempt from expensing, and when and under 
        what circumstances the Securities and Exchange Commission recognizes and 
        enforces standards for the accounting of stock-based compensation;
Whereas Congressional action to set accounting standards would set the dangerous 
        precedent of substituting provisions advocated by special interests in 
        place of standards that are set independently and objectively by the 
        FASB;
Whereas Congressional intervention in this area would not only politicize but 
        also compromise the integrity of the accounting standard setting process 
        of the FASB and undermine the credibility of financial reporting by 
        United States companies;
Whereas Congress has long recognized the fundamental importance of the 
        independent private sector accounting standard setting process to United 
        States capital markets;
Whereas Congress reaffirmed this principle in the Sarbanes-Oxley Act of 2002 by 
        authorizing the FASB to obtain independent funding through assessments 
        on private industry rather than through appropriations from Congress or 
        donations from private industry; and
Whereas the April 2003 Policy Statement of the Securities and Exchange 
        Commission endorsed the fundamental importance of the independent 
        private sector accounting standard setting process: Now, therefore, be 
        it
    Resolved by the Senate, That the Senate--
            (1) should continue to recognize and support the integrity 
        and independence of the accounting standard setting process of 
        the Financial Accounting Standards Board;
            (2) should not interfere with the independence of the 
        Financial Accounting Standards Board; and
            (3) should not dictate accounting standards to the 
        Financial Accounting Standards Board for stock-based 
        compensation or for any other financial accounting issue.
                                 <all>