Academic journal article Journal of Accountancy

The S & L Bailout Bill: Making the AICPA's Voice Heard

Academic journal article Journal of Accountancy

The S & L Bailout Bill: Making the AICPA's Voice Heard

Article excerpt

THE S&L BAILOUT BILL: MAKING THE AICPA's VOICE HEARD

Washington pundits have said for years that one shouldn't watch sausages or laws being made. The American Institute of CPAs Washington office did watch as the massive savings and loan bailout bill moved through Congress. And precisely because the AICPAA kept a close eye on the process, the S&L bill contains less onerous ingredients, making it more palatable to the accounting profession.

The Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA) is very long and complex--it's probably fair to say most members of Congress haven't read its entire 700-plus pages--and some of its initial provisions were not very appetizing.

Moreover, several provisions in earlier Senate and House bills could have adversely affected the accounting profession. For example, as originally drafted the section of the bill that expanded the bank regulators' enforcement arm to impose penalties on accountants, attorneys, real estate appraisers and others was onerous. The efforts of the AICPA Washington office, state CPA societies and CPA firms led to a significant and appropriate modification of that provision--namely, inclusion of a "knowingly and recklessly" test (see "institution-affiliated party" below). Further, a provision in the Senate bill eliminating certain defenses properly available to defendants in lawsuits brought by federal regulators against certain individuals--including accountants--was dropped from the final bill.

Competing audit provisions also consumed much of the profession's efforts. The AICPA strongly opposed the Senate version, which would have provided federal regulators with legislative authority to prescribe rules and regulations governing applicable auditing standards and to select the thrift's auditor. …

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