Senate takes step to rein in FASB.

When the U.S. Senate held hearings on derivatives accounting last fall, Senator Phil Gramm (R-Texas) said the last thing he wanted was congressional involvement in setting accounting standards. But Senator Lauch Faircloth (R,-N.C.) has introduced a bill that directly affects accounting standards. The Accurate Accounting Standards Certification Act of 1997 (S 1560) essentially absolves banks from any Financial Accounting Standards Board statements on derivatives unless the appropriate federal banking agency certifies that the FASB standards would (1) help the entity more accurately reflect assets, liabilities and earnings and (2) not diminish the use of risk management practices. In introducing the bill, Faircloth said, "In my view, the new standards will throw a wrench into the present accounting rules that will only serve to confuse investors."

"We're disappointed that the bill was introduced and we're sorry to see this has happened," FASB Chairman Edmund Jenkins told the journal. He expects he will have an opportunity to discuss the bill with Faircloth and his staff in the future. Congressman Richard H. Baker (R-La.) said he planned to introduce legislation to delay the statement's implementation. The FASB had not yet seen Baker's proposed legislation at Journal press time and so could not comment on it specifically, but Jenkins expressed concern over both bills' possible impact on the board's independence and objectivity.

In mid-December, the board was still considering comment letters and did not expect to issue a final statement by yearend. "We want to make sure that we do a high-quality job, and to do that we'll have to spend some more time considering the issues," Jenkins said. "The primary goal is not to get it out, but to create a quality document." The board's estimate for publication is now late March.

However, the board announced a change in the effective date of the proposal: For calendar-year companies, the standard would be effective January 1, 2000. The previous date was December 15, 1998. The later date will give entities more time to change their systems, according to a statement from the board.

The Senate bill, approximately two pages, can be downloaded from the federal government's THOMAS Web site (http://thomas.loc.gov/home/ thomas.html).