U.S. Chamber Opposes Changes to Accounting Practices
WASHINGTON, D.C. - The United States Chamber of Commerce today testified in opposition to a proposal by the Financial Accounting Standards Board (FASB) to eliminate the pooling-of-interest method of accounting for business combinations.
"FASB's proposal to eliminate this long-standing accounting method for business combinations is unwarranted," said Dr. Martin Regalia, chief economist for the U.S. Chamber. "Without overwhelming evidence that changes are necessary, FASB should proceed cautiously."
FASB proposes to eliminate the pooling method of accounting for business combinations, because they contend that all business combinations are essentially purchases and should be subject to purchase accounting.
The Chamber questioned FASB's assertions. Not all business combinations are acquisitions where one firm gains control. Many of today's combinations are legitimate combinations of boards, management, staff and assets. FASB also listed staffing constraints and international considerations as additional reasons for the rule change.
"We should demand a more compelling reason for changing our accounting standards than the lack of staff or the desire to conform to our international competitors, especially when there is no consensus abroad," said Regalia. "This proposal will not further the goal of providing more reliable financial statements and could hinder the growth of certain economic sectors which depend disproportionately on intangible assets," he added.
The Chamber encouraged FASB to delay any changes to the accounting standards until the findings of a group of experts, recently organized by the Securities and Exchange Commission, can be heard. Given the lack of an immediate or pressing need for change, a rush to judgement is unnecessary at this time, he said.
The U.S. Chamber of Commerce is the world's largest business federation representing more than three million businesses and organizations of every size, sector and region.
# # #