United States Government Publishing Office publisher pbl distributor dst United States Government Accountability Office author aut Government Organization text government publication eng GAOREPORTS Legislative Agency Publications gao legislative 2010-08-12 U.S. Government Printing Office 2004-06-28 monographic deposited born digital 4 p. GA 1.13:GAO-04-840R https://www.govinfo.gov/app/details/GAOREPORTS-GAO-04-840R P0b002ee1803795fa f:d04840r DGPO 2010-08-12 2011-03-24 GAOREPORTS-GAO-04-840R machine generated eng fdlp REPORT GAOREPORTS-GAO-04-840R GAO-04-840R Accounting standards Financial analysis Financial statements Stocks (securities) Private sector practices Standards and standardization Correspondence A10717 On March 31, 2004, the Financial Accounting Standards Board (FASB) issued an exposure document on a proposed Statement, Share-Based Payment, an Amendment of FASB Statements No. 123 and 95, which addresses the accounting for compensation to employees in the form of equity shares, including stock options. GAO recognizes that this is a complex and controversial issue on which reasonable people can and do disagree. In light of the above, there has been a renewed interest for the Congress to legislate accounting rules for stock options. Notwithstanding our and others' views on the merits of various accounting methods for stock options, GAO believes that the principle of independence, both in fact and in appearance, is essential to the credibility of and confidence in any authoritative standard-setting processes. With respect to the role of FASB in this and other areas, we support its efforts, as the Securities and Exchange Commission's (SEC) designated independent private-sector standard-setting body, to identify issues for consideration, prepare exposure documents, conduct outreach efforts and solicit comments on exposure documents, and consider the resulting comments in finalizing and issuing new accounting standards. This time-tested and proven deliberative process has served to strengthen financial reporting and ensure general acceptance of the nation's accounting standards. This process is especially important given the complexity and controversial nature of some accounting standards, including the accounting for share-based payments. We note that FASB has an established process in place to obtain feedback from its constituent groups, including financial statement preparers, auditors, and users such as individual investors, institutional investors, lenders, creditors, professional analysts, and various other parties. These processes were established in order to balance the competing interests and demands of the various groups while providing standards that promote transparent, credible, and comparable financial information. We believe it is critical that FASB complete its analysis of comments received on its exposure document on share-based payment and finalize its proposed Statement in accordance with its established independent standard-setting process. As a safeguard, the Congress has provided the SEC with oversight responsibility for FASB standard-setting activities. The SEC determined that FASB met the statutory criteria established in the Sarbanes-Oxley Act of 2002. In our opinion, the FASB's independent standard-setting process, subject to SEC oversight, should be allowed to proceed in its consideration of accounting for stock options. https://www.govinfo.gov/content/pkg/GAOREPORTS-GAO-04-840R/html/GAOREPORTS-GAO-04-840R.htm https://www.govinfo.gov/content/pkg/GAOREPORTS-GAO-04-840R/pdf/GAOREPORTS-GAO-04-840R.pdf GAO-04-840R https://www.govinfo.gov/app/details/GAOREPORTS-GAO-04-840R Correspondence GAO-04-840R; Independent Standard-Setting Process for Establishing Accounting Standards for Private-Sector Entities; Accounting standards Financial analysis Financial statements Stocks (securities) Private sector practices Standards and standardization