Academic journal article Journal of Accountancy

Stock Compensation: AICPA Opposes Standard-Setting Legislation

Academic journal article Journal of Accountancy

Stock Compensation: AICPA Opposes Standard-Setting Legislation

Article excerpt

American Institute of CPAs President Philip B. Chenok, in a letter to Senator Christopher Dodd (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 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 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." Chenok, pointing to recurring attacks on FASB's independence since it superseded the Institute's Accounting Principles Board in 1973, referred to the conclusions of the Wheat committee (see sidebar) and observed: "True, the pending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. …

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