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Business groups and a senior Democratic lawmaker are pressuring the U.S. auditing watchdog to get in line with likely changes to a controversial mark-to-market accounting rule that has forced banks to record billions of dollars of writedowns.
The Financial Accounting Standards Board, which sets U.S. accounting rules, has already bowed to congressional demands and proposed giving banks more flexibility to value their toxic assets in the current frozen markets.
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Now business groups are turning up the heat on the Public Company Accounting Oversight Board, the Washington D.C.-based audit watchdog, to do its part to be more flexible in its application of the accounting rule.
"We don't want to get into a situation where one-half of financial reporting world is making a lot of changes and the other is not," said Thomas Quaadman, executive director of reporting policy at the U.S. Chamber of Commerce, the largest business lobbying group. "If (the PCAOB) is not on the same wavelength, it will all be for naught," he said.
If the PCAOB does not act expeditiously, Congress may get involved as it did with FASB.
Paul Kanjorski, the Democrat who heads the House Financial Services subcommittee on capital markets, said that after FASB finalizes its proposals in early April the PCAOB "must act swiftly to ensure that auditors incorporate these revisions in their reviews of the books of financial institutions as quickly as possible."
"I am hopeful that PCAOB will pursue this action on its own, and I encourage the Securities and Exchange Commission to use its oversight role of PCAOB to make sure that it happens," Kanjorski said in an emailed statement to Reuters.
He and other lawmakers on the full committee earlier this month pressured FASB to relax the rule.
Congress created the PCAOB in 2002 after the Enron accounting scandal to oversee corporate auditors. It has occasionally issued guidance on audit practices, such as how to implement Sarbanes-Oxley law compliance rules.
Earlier this week, a spokeswoman for the PCAOB said if future guidance on mark-to-market is needed, the board will not hesitate to act.
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