Speech by SEC Chairman: (In Part)
Remarks Before the Financial Accounting Foundation’s 2011 Annual Board of Trustees Dinner by
Chairman Mary L. Shapiro
U. S. Securities and Exchange Commission
Washington, D. C.
May 24, 2011
“Funding for the GASB and IASB
In addition to the quality of its board and staff, one reason the FASB is able to maintain its position as a world leader is the independent and stable funding it has received, through the issuer accounting support fee, since enactment of Sarbanes- Oxley.
And this brings me to a third area in which I believe change would benefit investors: stable funding for other standard- setting boards.
The Governmental Accounting Standards Board establishes standards that state and local governments may elect to use when raising funds through issuance of municipal securities. And it is a leader in studying how well those standards work. Just last week, the FAF announced that GASB has commissioned an independent study on the purposes of financial accounting and reporting by state and local governments.
Designed to examine how GASB guidelines and standards help investors assess the accountability of local governments and their offerings, it is a timely reminder of the impor-tant and unique role that GASB fills.
I am pleased that the Dodd- Frank Act recognized the importance of sufficient and stable resources by authorizing the Commission to require a national securities association to fund the GASB by establishing an annual fee. The Commission recently directed FINRA to establish this fee which will strengthen the independence of the GASB as the Trustees will no longer need to solicit contributions from the very people who must apply the standards that the GASB develops.
Yet another important standard- setter, the IASB, lacks an independent and assured source of funding, as the IFRS Foundation has no authority to impose funding requirements. The threats of interference during the financial crisis serve as a continued reminder of the importance of financial independence for the IFRS Foundation and the IASB.
I know from my role as a member of the Monitoring Board that the trustees of the IFRS Foundation are working closely with regulatory and other public authorities and key stake-holder groups to explore more stable funding mechanisms. Until then, however, funding for the IASB will remain a challenge. And so the SEC’s staff continues to evaluate short- and long- term options for assisting the IFRS Foundation. I would like to thank the FAF and its leadership for their continued input and support on this important issue.”
Note: GASB is a branch of the Financial Accounting Foundation. The GASB is covered in Chapter 13 Personal Financial Statements and Accounting for Governments and Not- for- Profit Organizations.
a. How is the FASB funded?
b. How is the GASB funded?
c. How is the IASB funded?