[Congressional Record Volume 159, Number 36 (Wednesday, March 13, 2013)]
[Extensions of Remarks]
[Pages E287-E288]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




    PROVIDING FOR CONSIDERATION OF H.R. 933, DEPARTMENT OF DEFENSE, 
 MILITARY CONSTRUCTION AND VETERANS AFFAIRS, AND FULL-YEAR CONTINUING 
                        APPROPRIATIONS ACT, 2013

                                 ______
                                 

                               speech of

                        HON. K. MICHAEL CONAWAY

                                of texas

                    in the house of representatives

                        Wednesday, March 6, 2013

  Mr. CONAWAY. Mr. Speaker, I rise today to highlight an important 
oversight in the implementation of the sequester that this CR does not 
address: the inclusion of several private, non-profit organizations in 
the scope of the sequester.
  We all recognize the importance of eliminating our country's growing 
deficit and debt. While the sequester is in no way the best solution to 
this problem, we cannot afford to ignore our nation's debt crisis. 
Meaningful spending cuts are absolutely required in order to get our 
fiscal house in order.
  As a CPA, I am concerned about two organizations in particular, the 
Public Company Accounting Oversight Board and the Financial Accounting 
Standards Board. These two organizations were designed from their 
inception to be independent of the federal budget process.
  High-quality accounting and independent audit oversight is critical 
to providing transparent, consistent, comparable, relevant, and 
reliable financial information to investors. Because of the complexity 
and the competing stakeholder interests associated with accounting 
standards, Congress has repeatedly determined that the establishment 
and enforcement of these standards should be managed by independent, 
private-sector organizations.
  In order to insulate the PCAOB and FASB from coercion and to protect 
their independence, Congress authorized these organizations to collect 
fees as dedicated sources of funding in the Sarbanes-Oxley Act. These 
fees are not federal dollars; they never touch the Treasury or any 
other governmental entity, and are not subject to appropriation. In 
fact, Section 109(c)(1) of Sarbanes-Oxley specifically says: 
``accounting support fees and other receipts of the [PCAOB] and [FASB] 
shall not be considered public monies of the United States.''
  Importantly, neither the PCAOB nor FASB has any budget authority, or 
the ability to obligate and expend funds on behalf of the Federal 
government. Section 109(i) of Sarbanes-Oxley clarifies their 
independence further by stating: ``Nothing in this section shall be 
construed to render either the [PCAOB], [FASB], or both, subject to 
procedures in Congress to authorize or appropriate public funds, or to 
prevent such organization from utilizing additional sources of revenue 
for its activities . . .''
  Despite this clear Congressional intent to keep the PCAOB and FASB 
independent of the Federal budget process, OMB included them both in 
the President's Budget, making them subject to sequestration under the 
BCA. Yet, because their revenues are not federal monies, sequestering 
their funds would have no impact on the Federal budget and would not 
reduce the deficit one dollar.
  Sequestration of the PCAOB and FASB's accounting support fees would 
jeopardize the independence of the accounting standards-setting and 
auditing process, and provide the Federal government with unintended 
and unprecedented control over these institutions. That type of control 
is precisely what Congress sought to avoid when it made the PCAOB and 
FASB independent of the Federal budget process in Sarbanes-Oxley.
  Absent correction, I fear that FASB's sister organization, the 
Government Accounting Standards Board--GASB--will also be subject to 
sequester. Like the PCAOB and FASB, GASB had its independence firmly 
established with its own authorization to collect fees and its complete 
separation from the federal budget written into Dodd-Frank.
  In order to implement Congressional intent and maintain the 
independence of the accounting and auditing community, we must exempt 
these private, non-profit organizations from the President's Budget and 
clarify that these and other similarly situated entities are not 
subject to current or future sequestration under the BCA.
  I would like to insert into the Record a bipartisan letter signed by 
nine members of the Congressional Caucus on CPAs and Accountants. While 
the letter is focused on FASB and GASB, it is equally applicable to the 
PCAOB and shows the bipartisan concern that protecting the independence 
of these organizations has.

                                Congress of the United States,

                                Washington, DC, February 26, 2013.
     Hon. Barbara Mikulski,
     Chairman, Committee on Appropriations, U.S. Senate, 
         Washington, DC.
     Hon. Patty Murray,
     Chairman, Senate Budget Committee, U.S. Senate, Washington, 
         DC.
     Hon. Harold Rogers,
     Chairman, Committee on Appropriations, House of 
         Representatives, Washington, DC.
     Hon. Paul Ryan,
     Chairman, Committee on the Budget, House of Representatives, 
         Washington, DC.
       Dear Chairmen Mikulski, Rogers, Murray, and Ryan: As 
     Members of the Bi-Partisan Congressional Accountants Caucus, 
     we are concerned about the Office of Management and Budget's 
     (``OMB'') unilateral determination that sequestration applies 
     to the Financial Accounting Standards Board (``FASB'') under 
     the Budget Control Act of 2011 (P.L. 112-25) (``BCA'').
       OMB's decision to sequester funding for FASB, and the 
     potential for a future sequestration of the Governmental 
     Accounting Standards Board (``GASB''), undermines the 
     independence required for the establishment of fair and 
     reliable accounting standards. It also contradicts 
     Congressional intent and the legal requirements of the BCA, 
     the Sarbanes-Oxley Act of 2002 (``SOX''), and the Dodd-Frank 
     Wall Street Reform and Consumer Protection Act (``Dodd-
     Frank''). Consequently, we ask that FASB and GASB be excluded 
     from the list of entities subject to any current or future 
     sequestration under the BCA.
       High-quality accounting standards are critical to providing 
     transparent, consistent, comparable, relevant, and reliable 
     financial information to investors. Because of the complexity 
     and the competing stakeholder interests associated with 
     accounting standards, Congress has repeatedly determined that 
     the establishment of these standards should be managed by an 
     independent, private-sector body. Congress statutorily 
     authorized the SEC to designate FASB as the entity 
     responsible for developing financial accounting and reporting 
     standards for all nongovernmental, private-sector entities 
     that issue financial statements in accordance with generally 
     accepted accounting principles.. Similarly, GASB is 
     recognized as the private-sector accounting standards-setter 
     for state and local governments.
       Congress has determined that independent, private-sector 
     funding sources are necessary in order for those entities to 
     remain objective and unbiased. Therefore, Congress authorized 
     the collection of fees as dedicated sources of funding to 
     insulate FASB and GASB from coercion and to protect their 
     independence. It is important to note that those fees are 
     explicitly not public monies of the United States; the fees 
     never touch the Treasury or any other governmental entity, 
     and are not subject to appropriation.
       Despite this clear Congressional intent to keep FASB and 
     GASB independent of the Federal budget process, OMB 
     unilaterally decided to include FASB in the President's 
     Budget, making it subject to sequestration under the BCA. 
     Absent correction, we fear that OMB may also decide to 
     include GASB in the President's Budget, thereby also making 
     it subject to sequestration. Importantly, neither FASB nor 
     GASB has budget authority, or the ability to obligate and 
     expend funds on behalf of the Federal government. Therefore, 
     sequestering their funds would have no impact on the Federal 
     budget and would not reduce the deficit one dollar.
       Sequestration of FASB accounting support fees would 
     jeopardize the independence of the accounting standards-
     setting process and provide the Federal government with 
     unintended and unprecedented control over FASB's budget. That 
     type of control is precisely what Congress sought to avoid 
     when it made FASB independent of the Federal budget process 
     in SOX, and GASB in Dodd-Frank.
       In order to implement Congressional intent and maintain the 
     independence of the accounting standards-setting process, we 
     request that the Appropriations and Budget Committees take 
     such steps as might be necessary to exempt FASB and GASB from 
     the President's Budget and to clarify that these entities are 
     not subject to sequestration under the BCA. Thank you for 
     your attention to this matter.
           Best regards,
         Rep. Mike Conaway, Co-Chair, Caucus on CPAs and 
           Accountants.
         Sen. Mike Enzi, Co-Chair, Caucus on CPAs and Accountants.
         Rep. Brad Sherman, Co-Chair Caucus on CPAs and 
           Accountants.
         Rep. John Campbell.
         Rep. Bill Flores.
         Rep. Steven Palazzo.
         Rep. James Renacci.
         Rep. Patrick Murphy.
         Rep. Collin Peterson.

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