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Senior legislators, such as Senator Alfonse D'Amato (R-NY), chair of the Banking, Housing, and Urban Affairs Committee, have spoken in support of the FASB and for keeping the standards-setting function in the private sector.

Even the Financial Executives Institute, which is often at odds with FASB's proposals, supports the board remaining in the private sector. In his column in FEI's monthly magazine Financial Executive, President P. Norman Roy states that FEI members "have serious concerns about the process. However, they believe the process can and should be fixed internally, without legislative intervention."

With such growing support for FASB and the private sector standards-setting, even a back-handed compliment from the FEI, prospects have dimmed for both S 1560, the Accurate Accounting Standards Certification Act of 1997, and HR 3165, the Financial Accounting Fairness Act of 1998. Both bills have no co-sponsors and the AICPA credits the efforts of the profession's grassroots effort with effectively communicating the need to keep FASB's authority in the private sector.

Periodically, as the political pressures surrounding an accounting project build, Congress inserts itself into the standards-setting process. The ongoing controversy regarding FASB's derivative and hedging proposal is the latest example. (The FASB proposal, Accounting for Derivative and Similar Financial Instruments and for Hedging Activities, requires all derivatives to be reported as assets or liabilities and measured at fair value.) The AICPA supports FASB's proposal and opposes both S 1560 and HR 3165.

S 1560, introduced by Senator Lauch Faircloth (R-NC), chair of the Senate Banking Subcommittee on Financial Institutions, would prohibit the application of FASB's derivative proposal to depository institutions, unless Federal bank regulators certify that the accounting standards will accurately reflect the earnings of banks. The AICPA points out that this would effectively derail the proposed derivative standard.

HR 3165 was introduced by Representative Richard Baker (R-LA), the chair of the House Banking Subcommittee on Capital Markets. HR 3165 would eviscerate the private standard-setting process by granting it to the SEC. At press time, the bill was referred to the Subcommittee on Finance and Hazardous Materials of the House Commerce Committee, of which Baker is not a member.

While there is now little movement, the AICPA continues to track the bills and believes there could be some activity after the November elections. FASB Chair Edmund Jenkins also said the bills have not yet died and the board is appreciative of the support it has received but continues to be on guard. *

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