Academic journal article Journal of Accountancy

Senate Takes Step to Rein in FASB

Academic journal article Journal of Accountancy

Senate Takes Step to Rein in FASB

Article excerpt

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. …

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