State Board Report
Both houses of Congress passed the JOBS Act (the Jump-Start Our Business Start-Ups Act – H.R. 3606 and S. 1933), on a vote of 390 to 23 in the House and 73 to 26 in the Senate. NASBA had encouraged Accountancy Board members, staff and other interested parties to contact their U.S. Senators before the bill’s passage on March 22. NASBA Chair Mark Harris and President Ken Bishop wrote to Senate members on March 16.
“Section 3 (c) of S. 1933 would prohibit FASB from establishing ‘any accounting principles that would require an emerging growth company to comply with any new or revised financial accounting standard as of an effective date that is earlier than the effective date that applies to a [privately held] company … ‘
“The inclusion of Section 3 (c) would undermine the rigorous, independent standard-setting process undertaken by FASB, and effectively prevent FASB from considering and balancing the broad range of interests in setting an effective date, including the time and effort necessary to transition to new requirements. The provisions would significantly compromise the FASB’s mandate of ensuring that investors have the benefit of high quality financial statements that provide uniform, timely, transparent, and representative depictions of a company’s financial condition and would establish a dangerous precedent by effectively legislating accounting standards.”
SEC Chairman Mary L. Shapiro had also voiced her concern about the legislation’s weakening important investor protections. NASBA Past Chair, U.S. Congressman K. Michael Conaway observed: “Almost 80 years ago, Congress had the wisdom to establish an independent body to develop those standards so that accounting was never influenced by politics. Today, as more Americans than ever are active participants in financial markets, the need for a trusted, independent arbiter of public accounting standards has never been more important….”
As the Senate version of the bill added provisions to prevent “crowd-funding” practices (which allow companies to acquire thousands of investors giving very small shares of stock to each), the bill went back to the House and was again passed by a vote of 380 to 41.
President Obama has said he will sign the legislation. The Wall Street Journal commented: “The measure marks a significant rollback of the 2002 Sarbanes-Oxley law…as well as the first major slackening of securities law since the Dodd-Frank financial overhaul.”
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