[Congressional Record Volume 149, Number 130 (Monday, September 22, 2003)]
[Extensions of Remarks]
[Pages E1848-E1849]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                THE IMPORTANCE OF INDEPENDENCE FOR FASB

                                 ______
                                 

                           HON. BARNEY FRANK

                            of massachusetts

                    in the house of representatives

                       Monday, September 22, 2003

  Mr. FRANK of Massachusetts. Mr. Speaker, earlier this year, I 
received a very thoughtful letter from Eugene O'Kelly, the Chairman and 
Chief Executive Officer of KPMG. I was thoroughly impressed to receive 
a strong letter in favor of the independence of accounting standards 
from the Chief Executive of this major accounting firm. I believe Mr. 
O'Kelly's letter makes a very important contribution to the debate on a 
significant public policy issue and I ask that it be printed here.

                                                             KPMG,


                                                  Park Avenue,

                                       New York, NY, July 9, 2003.
     Hon. Barney Frank,
     Ranking Minority Member, House Committee on Financial 
         Services
     Rayburn House Office Building, Washington, DC.
       Dear Congressman Frank: That public trust in our capital 
     markets institutions has been badly shaken by recent 
     corporate scandals is a truth that hardly needs repeating. 
     Congress recognized the need to restore that trust when it 
     passed the Sarbanes-Oxley Act. Among its many reforms, the 
     Act established an independent funding source for the 
     Financial Accounting Standards Board, to avoid any appearance 
     of undue influence. It would be sadly ironic if the Congress 
     itself were now to undermine the independence of the FASB.
       The immediate controversy, of course, is accounting for 
     stock options, but it is not my purpose here to debate that 
     subject (KPMG is on record that they should be expensed). 
     Rather, I am concerned about a more fundamental issue--
     namely, the integrity of the independent standard-setting 
     process that has served out financial markets remarkably well 
     for decades.
       To do right by investors, the FASB must be free to render 
     its judgments on the basis of sound accounting and firancial 
     reporting, the lodestar of which is transparency. As the FASB 
     patiently (if sometimes inartfully) explains, it does not, 
     indeed it must not, take into account the economic 
     consequences of the standards it writes. Critics seize upon 
     this position to justify legislative intervention on the 
     basis of economic policy. But this criticism misses the 
     point. The FASB bases its standards on clarity and 
     transparency rather than other factors precisely because this 
     is the only approach beneficial to a free-market economy.
       The purpose of financial reporting is to provide investors 
     as clear a window as possible into a company's underlying 
     operations and results. When it succeeds, the markets 
     efficiently allocate capital to its highest and best uses, 
     and the economy prospers. To set accounting standards in 
     order to engineer a particular outcome or to benefit a 
     certain industry would distort the true picture of company 
     performance and misdirect the flow of investment. To 
     understand the ensuing damage, we need look no farther 
     than to the end of the last century, littered with the 
     failures of central economic planning.
       To provide transparency to investors, in other words, 
     accounting standard setters must be neutral with respect to 
     economic winners and losers. They cannot be influenced by 
     concerns over which industry is in favor or in need. This is 
     a task for which an elected body is frankly ill suited. Just 
     consider the consequences to our capital markets if financial 
     reporting were subject to the same vicissitudes of politics 
     and public opinion as, say, fiscal policy.
       Congress, like all interested parties, has every right to 
     make its views known on the standards proposed by the FASB. 
     And all those affected have a right to thorough due process 
     in the FASB's decision-making. Ultimately, however, the FASB 
     must be free from political pressure to make its decisions on 
     the merits of transparency. Over the years, Congress wisely 
     has resisted the temptation to intervene. Today, when more 
     than ever investors need to know that financial reports tell 
     the straight story, nothing less than a truly independent 
     accounting standard-setting body will do.
           Sincerely,
                                                Eugene D. O'Kelly,
                                     Chairman and Chief Executive.

[[Page E1849]]

                       SENATE COMMITTEE MEETINGS

  Title IV of Senate Resolution 4, agreed to by the Senate on February 
4, 1977, calls for establishment of a system for a computerized 
schedule of all meetings and hearings of Senate committees, 
subcommittees, joint committees, and committees of conference. This 
title requires all such committees to notify the Office of the Senate 
Daily Digest--designated by the Rules Committee--of the time, place, 
and purpose of the meetings, when scheduled, and any cancellations or 
changes in the meetings as they occur.
  As an additional procedure along with the computerization of this 
information, the Office of the Senate Daily Digest will prepare this 
information for printing in the Extensions of Remarks section of the 
Congressional Record on Monday and Wednesday of each week.
  Meetings scheduled for Tuesday, September 23, 2003 may be found in 
the Daily Digest of today's Record.

                           MEETINGS SCHEDULED

                              SEPTEMBER 24
     9 a.m.
       Environment and Public Works
       Clean Air, Climate Change, and Nuclear Safety Subcommittee
         To hold hearings to examine the findings of the GAO 
           concerning the Federal Emergency Management Agency's 
           financial allocations and activities after the 
           terrorist attacks on September 11th, and to conduct 
           oversight on the Federal Emergency Management Agency's 
           effectiveness since becoming part of the Department of 
           Homeland Security.
                                                            SD-406
     9:30 a.m.
       Foreign Relations
         To hold hearings to examine a five-year plan for the 
           current situation in Iraq.
                                                            SD-106
       Governmental Affairs
         To hold hearings to examine discrimination against 
           employees and retirees relating to social security 
           government pension offset and windfall elimination 
           provisions.
                                                            SD-342
     9:45 a.m.
       Armed Services
         To hold hearings to examine the report of the Panel to 
           Review Sexual Misconduct Allegations at the United 
           States Air Force Academy.
                                                            SR-325
     10 a.m.
       Appropriations
         To hold hearings to examine the President's fiscal year 
           2004 supplemental request for Iraq and Afghanistan.
                                                            SR-325
       Health, Education, Labor, and Pensions
         To hold hearings to examine intellectual diversity.
                                                            SD-430
     2 p.m.
       Indian Affairs
         To hold hearings to examine S. 1601, to amend the Indian 
           Child Protection and Family Violence Prevention Act to 
           provide for the reporting and reduction of child abuse 
           and family violence incidences on Indian reservations.
                                                            SR-485
     2:30 p.m.
       Judiciary
       Crime, Corrections and Victims' Rights Subcommittee
         To hold hearings to examine elder abuse, neglect, and 
           exploitation.
                                                            SD-226
       Foreign Relations
         To hold hearings regarding democratic institutions in 
           Iraq and the Middle East.
                                                            SD-106

                              SEPTEMBER 25
     2:30 a.m.
       Intelligence
         To hold closed hearings to examine certain intelligence 
           matters.
                                                            SH-219
     9:30 a.m.
       Armed Services
         To hold hearings to examine ongoing operations and 
           reconstruction efforts in Iraq.
                                                            SH-216
       Judiciary
         Business meeting to consider pending calendar business.
                                                            SD-226
     10 a.m.
       Banking, Housing, and Urban Affairs
         To hold hearings to examine counterterror initiatives in 
           the terror finance program.
                                                            SD-538
       Health, Education, Labor, and Pensions
         Business meeting to consider S. 606, to provide 
           collective bargaining rights for public safety officers 
           employed by States or their political subdivisions, the 
           Workforce Investment Act Amendments of 2003, the Family 
           Smoking Prevention and Tobacco Control Act, and pending 
           nominations.
                                                            SD-430
       Indian Affairs
         To hold hearings to examine proposed legislation to 
           reauthorize the Head Start program.
                                                            SD-562
     2:30 p.m.
       Foreign Relations
         To hold hearings to examine the nominations of Richard 
           Eugene Hoagland, of the District of Columbia, to be 
           Ambassador to the Republic of Tajikistan, Pamela P. 
           Willeford, of Texas, to be Ambassador to Switzerland, 
           and to serve concurrently and without additional 
           compensation as Ambassador to the Principality of 
           Liechtenstein, and James Casey Kenny, of Illinois, to 
           be Ambassador to Ireland.
                                                            SD-419
     3 p.m.
       Foreign Relations
       African Affairs Subcommittee
       Health, Education, Labor, and Pensions
       Children and Families Subcommittee
         To hold joint hearings to receive a briefing from Senator 
           Frist on HIV/AIDS in Africa.
                                                            SH-216

                              SEPTEMBER 30
     9 a.m.
       Governmental Affairs
         To hold hearings to examine the nominations of Dale 
           Cabaniss, of Virginia, to be a Member of the Federal 
           Labor Relations Authority, Craig S. Iscoe, to be 
           Associate Judge of the Superior Court of the District 
           of Columbia, and Brian F. Holeman, to be an Associate 
           Judge of the Superior Court of the District of 
           Columbia.
                                                            SD-342
     10 a.m.
       Banking, Housing, and Urban Affairs
         To hold hearings to examine the state of the securities 
           industry.
                                                            SD-538
       Health, Education, Labor, and Pensions
       Substance Abuse and Mental Health Services Subcommittee
         To hold hearings to examine underage drinking.
                                                            SD-430

                               OCTOBER 2
     10 a.m.
       Health, Education, Labor, and Pensions
         To hold joint hearings with the House Committee on Energy 
           and Commerce to examine activities of the National 
           Institutes of Health.
                                                            SD-106
       Energy and Natural Resources
       National Parks Subcommittee
         To hold hearings to examine S. 524, to expand the 
           boundaries of the Fort Donelson National Battlefield to 
           authorize the acquisition and interpretation of lands 
           associated with the campaign that resulted in the 
           capture of the fort in 1862, S. 1313, to establish the 
           Congaree Swamp National Park in the State of South 
           Carolina, S. 1472, to authorize the Secretary of the 
           Interior to provide a grant for the construction of a 
           statue of Harry S Truman at Union Station in Kansas 
           City, Missouri, and S. 1576, to revise the boundary of 
           Harpers Ferry National Historical Park.
                                                            SD-366
     2 p.m.
       Indian Affairs
         To hold hearings to examine S. 1438, to provide for 
           equitable compensation of the Spokane Tribe of Indians 
           of the Spokane Reservation in settlement of claims of 
           the Tribe concerning the contribution of the Tribe to 
           the production of hydropower by the Grand Coulee Dam.
                                                            SR-485

                               OCTOBER 16
     10 a.m.
       Indian Affairs
         To hold hearings to examine the Missouri River Master 
           Manual.
                                                            SR-485

                               OCTOBER 21
     10 a.m.
       Indian Affairs
         To hold hearings to examine S. 1565, to reauthorize the 
           Native American Programs Act of 1974.
                                                            SR-485

                             POSTPONEMENTS

                              SEPTEMBER 24
     9:30 a.m.
       Judiciary
         To hold hearings to examine the nominations of Dale S. 
           Fischer to be United States District Judge for the 
           Central District of California, Claude A. Allen, of 
           Virginia, to be United States Circuit Judge for the 
           Fourth Circuit, and Gary L. Sharpe to be United States 
           District Judge for the Northern District of New York.
                                                            SD-226