Perlmutter-Lucas Amendment is Dead. For Now.

The Perlmutter-Lucas Amendment would have created a new regulatory body to oversee the FASB and essentially approve or reject individual standards.  I’ve gone on the record as saying that this is a bad idea because it could compromise the integrity of the standards setting process, essentially allowing industries with powerful lobbies to exercise undue influence.  That’s bad public policy.

But I’ve also said that I understand and feel the pain of auditors and financial statement preparers that have to comply with these FASB standards.  Something has to be done.

A recent revision to Perlmutter-Lucas backs off from new oversight and instead only requires that the new panel have input into the standards setting process.  This isn’t much different from already happens.  In other words, the status quo survives.

I don’t think that’s the right answer.  The issue isn’t whether the FASB solicits input from other stakeholders, it’s what they do with that input once they receive it.

The death of Perlumtter-Lucas does not solve that core problem.  Until that gets addressed, you will continue to see attempts like this one to reign in the FASB.

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