A few weeks ago, CFO.com ran this article about how the SEC held up approval of FASB’s budget for four-plus months until the accounting standards-setter agreed to give the SEC more say over the appointment of FASB members. Jack Ciesielski fleshes this story out more in his “AAO Weblog.”
Here is a blurb from a member: “Under Section 109 of Sarbanes-Oxley, for the first time, the SEC arguably has the authority to set the pay of FASB Board members. I say “arguably” because some believe that Section 109 doesn’t specifically provide the SEC with the authority to approve the budget of the “standard setting body” (ie. the FASB) for two reasons: (1) SOX recognized the existence and role of the Financial Accounting Foundation in approving the budget of the FASB; and (2) SOX was intended to maintain the then-current level of independence of the FASB from the Commission. If, as a number of recent articles have suggested, the SEC refused a 2007 pay raise for FASB Board members that had been previously approved by the FAF (which is FASB’s parent unit), the SEC’s actions could be seen as inconsistent with the language and intent of Section 109.”
I have no unique insight into what really is happening here, but bear in mind that all of the FASB board members, with perhaps the exception of academics, can make much more money in the private sector than at the FASB…so any shenanigans would likely scare off the most qualified candidates to sit on the FASB Board.
Whole Lotta Internal Controls
Yesterday, there were three new internal controls developments:
- PCAOB Report: 2nd Year Implementation of AS No. 2 – About 18 months after its first report, the PCAOB issued this 2nd one based on 275 inspections of audit firms
SEC Deputy Chief Accountant Warns of FAS 159 Fair Value Arbitrage
In FEI’s “Financial Reporting” Blog, Edith Orenstein does a great job analyzing this recent speech by SEC Deputy Chief Accountant James Kroeker about principles-based accounting. Jack Ciesielski also analyzes the speech in his “AAO Weblog.” More on this topic soon…