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Big-Four letter to US Congress on independent standard-setting

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19 Mar 2004

The Big Four public accounting firms have collectively written a Letter to Members of Congress (PDF 184k) endorsing the broad policy objectives of independent accounting standard setting and encouraging the Congress not to legislate accounting standards for stock options.

There are two key bills pending in Congress that would establish accounting for stock options and would result in recording compensation expense for only the top five officers in a company. All other options would not be expensed. FASB has announced its intention to propose that the fair values of all share-based payments (including share options) be charged to expense – a requirement similar to that in the recently issued IFRS 2 Share-based Payment. The Big Four wrote:

Investors and the capital markets rely on transparent financial reporting and an independent accounting standards-setting process. As we have previously stated in other contexts, we urge Congress to preserve the independence of the Financial Accounting Standards Board (FASB) and to avoid legislation that would have the effect of restricting the FASB's ability to establish accounting standards. Further, we reaffirm our support, already expressed to the FASB, for the mandatory expensing of all employee stock options, whose fair value would be determined in a manner suitable for the reporting company.

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