Stock compensation: AICPA opposes standard-setting legislation.American Institute of CPAs President Philip B. Chenok, in a letter to Senator Christopher Dodd This article or section contains information about one or more candidates in an upcoming or ongoing election.
Content may change as the election approaches. (D-Conn.), urged Congress to reject legislation that would mandate financial accounting standards for stock options that are granted to employees
Dodd chairs the Senate Banking, Housing and Urban Affairs Subcommittee on Securities, which held hearings on competing bills that, if signed into law, would block implementation of the Financial Accounting Standards Board's controversial Accounting for Stock-Based Compensation exposure draft. The ED requires companies to recognize an expense for all stock-based compensation awards an account of FASB's testimony before Dodd's subcommittee appears on page 20).
Chenok said his purpose was not to express an opinion on the accounting issue, since "the AICPA AICPA
See American Institute of Certified Public Accountants (AICPA). has not yet developed its position" on it, but, rather, to convey the Institute's views on the standard-setting process--particular its concern over statutorily mandated accounting standards.
"The AICPA is strongly opposed to any legislation that would seriously harm the ability of the independent FASB FASB
See: Financial Accounting Standards Board
See Financial Accounting Standards Board (FASB). to continue in its role as the private-sector body that sets accounting standards for American businesses--standards that are universally recognized as the most comprehensive in the world," Chenok wrote. "We fear," he continued, "that the pending legislation, if enacted, would cause such harm."
Avoiding a "slippery slope 'slippery slope' Medical ethics An ethical continuum or 'slope,' the impact of which has been incompletely explored, and which itself raises moral questions that are even more on the ethical 'edge' than the original issue ." Chenok, pointing to recurring re·cur
intr.v. re·curred, re·cur·ring, re·curs
1. To happen, come up, or show up again or repeatedly.
2. To return to one's attention or memory.
3. To return in thought or discourse. attacks on FASB's independence since it superseded the Institute's Accounting Principles Board The Accounting Principles Board (APB) is the former authoritative body of the American Institute of Certified Public Accountants (AICPA). It was created by the American Institute of Certified Public Accountants in 1959 and issued pronouncements on accounting principles until 1973, in 1973, referred to the conclusions of the Wheat committee (see sidebar (1) A Windows Vista desktop panel that holds mini applications (gadgets) such as a calendar, calculator, stock ticker and Vonage phone dialer. It is the Windows counterpart to the Dashboard in the Mac. See Windows Vista and gadget. ) and observed: "True, the pending legislation does not propose the wholesale relocation of standard-setting authority to government. But the fact is that a single significant legislative interference in the objective process followed by the FASB is a major step down a slippery slope to that very result."
He added that FASB's procedures provide for the collection a analysis of data and views fro sources and that the "FASB as issued only an exposure draft. Many other due-process procedures remain to be carried out."
The views ultimately expressed by the AICPA on the specific accounting standards for employee stock options, Chenok concluded, "may or may not be reflected in a final FASB statement FASB Statement
A standard set by the Financial Accounting Standards Board regarding a financial accounting and reporting method. Essentially, FASB statements determine the acceptable accounting practices that Certified Public Accountants use in reporting . But the AICPA will remain convinced that such a statement will have been adopted only after the most careful and objective consideration that it, like every other FASB statement, should be followed by American business."
The Financial Accounting Standards Board Financial Accounting Standards Board (FASB)
Board composed of independent members who create and interpret Generally Accepted Accounting Principles (GAAP). was established in 1973 on the basis of recommendations in the report of a committee headed by former Securities and Exchange Commissioner Francis M. Wheat. Here is an excerpt ex·cerpt
A passage or segment taken from a longer work, such as a literary or musical composition, a document, or a film.
tr.v. ex·cerpt·ed, ex·cerpt·ing, ex·cerpts
1. from that report, Establishing Financial Accounting Standards: Report of the Study on Establishment of Accounting Principles:
"There are distinct disadvantages to transferring the standard-setting function to the public sector. One very real concern is that government agencies may be more susceptible to political pressures than private bodies. This could lead to accounting standards being designed to accomplish the self-serving objectives of private interest groups rather than solely to meet the needs of those who use financial statements in making economic decisions. The political pressures evident in 1971 when Congressional action was taken to regulate the accounting treatment of the investment tax credit reinforce this concern" [emphasis added].