If a bill introduced in the House of Representatives last Friday makes it to the president's desk and is signed, the Securities and Exchange Commission will no longer have the final say on accounting regulation.
CFO.com reports that HR 1349, called the Federal Accounting Oversight Board Act, would create a new federal board comprised of the SEC chairman, the chairman of the Public Company Accounting Oversight Board, the Treasury Secretary, the Federal Deposit Insurance Corp. chairman and the chairman of the Federal Reserve. Under the bill, sponsored by Reps. Frank Lucas (R., Okla.) and Ed Perlmutter (D., Colo.), the Financial Accounting Standards Board would remain, but would be under the authority of the FAOB rather than the SEC.
According to CFO.com, the bill requires the board to make sure that accounting rules "handle illiquid and liquid assets differently." The story says:
[T]he bill states that if another federal financial regulatory agency determines that an accounting rule "has an adverse effect on the safety and soundness of the entities [it regulates], the health of the United States financial system, or the economy, [it] may request authorization from the FAOB to review such standard."
Critics say the provisions seem to be license to play with fair value accounting rules, which leaders so far have been reluctant to do, even in the current economic climate. But the bill's sponsors say the law gives the FASB and other regulators flexibility to respond to market changes. Opposition will also arise from those who think the new board would frustrate the FASB's efforts to converge U.S. and international accounting standards into one set.