Independent Standard-Setting Process for Establishing Accounting Standards for Private-Sector Entities Page: 2 of 4
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of the nation's accounting standards. This process is especially important given the
complexity and controversial nature of some accounting standards, including the
accounting for share-based payments.
We note that FASB has an established process in place to obtain feedback from its
constituent groups, including financial statement preparers, auditors, and users such
as individual investors, institutional investors, lenders, creditors, professional
analysts, and various other parties. These processes were established in order to
balance the competing interests and demands of the various groups while providing
standards that promote transparent, credible, and comparable financial information.
We believe it is critical that FASB complete its analysis of comments received on its
exposure document on share-based payment and finalize its proposed Statement in
accordance with its established independent standard-setting process. As a
safeguard, the Congress has provided the SEC with oversight responsibility for FASB
standard-setting activities. In enacting the Sarbanes-Oxley Act of 2002, the Congress
recognized the importance of having an independent standard-setting process that
facilitates accurate and effective financial reporting and protects investors. The Act
specified criteria for the SEC to use for determining whether a private-sector
accounting standard setter's principles will be considered as generally accepted. The
SEC determined that FASB met the statutory criteria established in the Sarbanes-
Oxley Act of 2002. In our opinion, the FASB's independent standard-setting process,
subject to SEC oversight, should be allowed to proceed in its consideration of
accounting for stock options.
We are available to discuss these matters further with you or with your staff.
David M. Walker
of the United States
GAO-04-840R Independent Standard-setting Process
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United States. General Accounting Office. Independent Standard-Setting Process for Establishing Accounting Standards for Private-Sector Entities, text, June 28, 2004; Washington D.C.. (digital.library.unt.edu/ark:/67531/metadc296211/m1/2/: accessed February 23, 2019), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.