[Congressional Record Volume 158, Number 38 (Thursday, March 8, 2012)]
[Extensions of Remarks]
[Page E342]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                  JUMPSTART OUR BUSINESS STARTUPS ACT

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                               speech of

                        HON. K. MICHAEL CONAWAY

                                of texas

                    in the house of representatives

                        Wednesday, March 7, 2012

       The House in Committee of the Whole House on the state of 
     the Union had under consideration the bill (H.R. 3606) to 
     increase American job creation and economic growth by 
     improving access to the public capital markets for emerging 
     growth companies:

  Mr. CONAWAY. Mr. Chair, I rise today to express my support for the 
efforts my colleagues have made this week to improve the regulatory 
environment for growing small businesses across our nation. This is 
important work that should continue without delay.
  As we move forward though, there is a policy I am opposed to in the 
underlying bill that I hope can be addressed either in the Senate or in 
Conference. Specifically, I am concerned that in this legislation, 
Congress sets a perilous precedent by establishing an accounting 
standard through legislation. While I am not opposed to this bill 
today, in part because I appreciate the work that has already been done 
to address this issue, there is still more to do to fully correct the 
problem I see.
  As a CPA and the former Chairman of the National Association of State 
Boards of Accountancy, I am concerned about the encroachment this bill 
makes on the independence of the Financial Accounting Standards Board 
or FASB. FASB is an independent, private sector organization which 
establishes the standards of fmancial accounting that govern the 
preparation of financial reports by nongovernmental entities.
  The law has long recognized the need for an independent body, 
unencumbered by political or business affiliations, to arbitrate the 
complex accounting questions that arise in our modern economy. FASB 
functions as a rule maker that sits above the fray, so that public 
companies, investors, analysts, and government officials can all rely 
on the integrity and accuracy of fmancial statements. FASB's 
independence from businesses and governments alike is central to their 
ability to balance the competing interests of all stakeholders and 
generate standards that everyone can have confidence in.
  Today's bill, H.R. 3606, takes a dangerous step away from this 
autonomy and towards a FASB that is held captive by the political and 
parochial interests of Congress. This legislation will interpose the 
views of Congress between FASB and the individuals and companies who 
rely on FASB's independence and judgment.
  While I am strongly in favor of lifting regulatory burdens on our 
nations businesses, small and large alike, Congress should not direct 
when particular accounting standards are applicable to emerging growth 
companies. Replacing the careful, inclusive, and deliberative judgments 
of FASB with the inexpert opinions of Congress could result in a 
standard that does not meet the competing needs of all market 
participants. Investors and analysts rely on the information in 
financial reports to fairly evaluate the firms they seek to invest in; 
FASB is the appropriate body to balance their need for information 
against the concerns of small business owners with the cost of 
complying with reporting requirements.
  I am encouraged that the Chairman, Ranking Member, and sponsor of 
this legislation have already met with representatives from accounting 
profession and made good faith efforts to address my concerns. However, 
there is still work to be done to improve this bill. I hope that as 
similar legislation is considered in the Senate and if the two houses 
meet in a conference committee, my colleagues will take a close look at 
the consequences of this policy and take another step back from this 
slippery slope.
  While many might argue that Congress ought to be able to set 
accounting standards, accountants are universally opposed to this idea. 
For those of us who spend our lives dealing with Congress's handiwork 
in the tax code, we see a grim glimpse of the future if Congress were 
to stand in for the independent accounting standards bodies. As I often 
tell my constituents, if you like the tax code, you will love financial 
statements when Congress writes the accounting rules.
  The value of good and effective accounting standards cannot be 
overstated; they are the yardstick of the marketplace. Good standards 
are essential to a well functioning economy because they provide a 
consistent framework for the meaningful evaluation of widely disparate 
entities. Without them, it is impossible to hold an accurate 
understanding of the fmancial position of a firm, an industry, or the 
wider economy.
  Almost 80 years ago, Congress had the wisdom to establish an 
independent body to develop those standards so that accounting was 
never influenced by politics. Today, as more Americans than ever are 
active participants in financial markets, the need for a trusted, 
independent arbiter of public accounting standards has never been more 
important.
  I look forward to working with my colleagues to improve this 
legislation and to further strengthen the independent process for 
writing financial accounting standards in the future.

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