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US FAF express concern about legislating accounting standards

  • FASB (old) Image

03 Oct 2008

Robert E Denham, chairman of the Financial Accounting Foundation (FAF) under which the FASB operates, has written to the leadership of both houses of the US Congress and to other key US government officials expressing grave concerns about the possibility of legislation that would overturn FASB Statement 157 Fair Value Measurements.

The FAF urges Congress to reject proposals that would threaten the independent accounting standard setting process. Click to Download Mr Denham's Letter (PDF 43k). Here is an excerpt:

We are very concerned about the current efforts of some to legislate the suspension of one of the FASB's standards, Statement 157 on fair value measurements. We believe that any legislative effort to overturn a FASB standard will greatly undermine investor confidence. We believe that once Congress starts setting accounting standards through its political process, the integrity of US accounting standard setting and the credibility of US financial reporting will be greatly compromised.

If Congress sends the message that special interests, through legislation, are able to overturn expert accounting judgement arrived at through an open and thorough due process, necessary and timely improvements in financial reporting will likely become impossible and the best interests of participants in the capital markets will not be served.

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