Accounting & Tax

Key Senator Speaks Up for FASB

House legislation that would curtail the standards board's proposal on options is ''not going anywhere'' in the Senate Banking Committee.
Stephen TaubJune 21, 2004

The chairman of the Senate Banking Committee lashed out at Congress for undermining efforts by the accounting standard setter to require that companies expense the value of stock options.

Richard Shelby (R-Ala.) said that the Financial Accounting Standards Board “is the proper agency to deal with this, not us,” according to Reuters.

Last Tuesday, the House of Representatives Financial Services Committee passed a bill that would aggressively scale back FASB’s proposal. The legislation would require companies to expense options granted only to their top five officers, and it would push back implementation of FASB’s rule by a year, pending the completion of an economic impact study.

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Following a committee hearing on bond market regulation, Shelby reportedly told members of the press that the House legislation is “certainly not going anywhere in the Banking Committee.”

The Bush Administration also seems to be supporting the standards board.

Speaking before a high-tech-industry group, Secretary of the Treasury John Snow said, “It’s important that if we move to expensing, and it looks like we are at some point, that the expensing rules be as sensible as possible.”

Asked if he meant that tech executives should stop fighting FASB’s plan, Snow reportedly responded, “I’m not going to make that judgment because that’s a choice for the SEC and FASB. But I did say [the high-tech industry] ought to focus their efforts on what the right expensing procedure is.”

Many technology companies oppose expensing options, which have traditionally been a popular form of compensation for these fast-growing but often cash-poor businesses.

FASB is expected to issue its final rules by year-end.