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Senator Lauch Faircloth (R-NC) introduced legislation in November 1997 designed to halt the effective date for the soon to be issued FASB standard on accounting for derivatives. Labeled the 1997 Accurate Accounting Standards Certification Act, it would require bank regulators to certify that the new standards will accurately reflect a bank's earnings and not impede the use of risk management tools. Faircloth has been quoted as saying that FASB has not heeded the comments of the banking industry.

Also in November the trustees of the Financial Accounting Foundation, the parent organization of the FASB, issued an open letter supporting private sector standard setting. While encouraging debate on the technical merits of a proposed standard, they expressed the view that the process should not be subject to governmental intervention as long as appropriate procedures in debating the issues are being followed. They view that one of their roles as trustees is to see that FASB and GASB continue to use appropriate due process procedures.

The letter was signed by 14 trustees.

In the February issue of The CPA Journal, immediate past chair of the FASB, Dennis Beresford gives his views on the state of FASB standard setting and the dangers of improper intervention with the process. *

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