The anticipated rollback of the 2010 Dodd-Frank financial-overhaul law could affect funding the Government Accounting Standards Board receives, according to the not-for-profit organization that oversees it.
The board, known as the GASB, sets financial accounting and reporting standards for state and local governments in the U.S.. The Financial Accounting Foundation is responsible for the oversight and administration of the activities of both the GASB and the Financial Accounting Standards Board, which is responsible for standards of both public and private companies as well as not-for-profit organizations.
A provision in Dodd-Frank allows the foundation to charge a fee for GASB’s services. The fee is paid by broker dealers regulated by the Financial Industry Regulatory Authority, or FINRA, that trade in the municipal bond market.
Before the introduction of the provision, the board was voluntarily funded by organizations that are required to follow the standards the GASB writes, creating a potential conflict of interest, said Matthew Broder, vice president of public affairs at the foundation.
“For the past six years, the GASB has enjoyed reliable and independent funding fees to support operations,” he said. The funding could be threatened if the Dodd-Frank Act is pared back, Mr. Broder added.
GASB fees made up 18% of the Financial Accounting Foundation’s total revenue in 2016. The organization is also funded by fees for FASB’s services, that come from a provision in the 2002 Sarbanes-Oxley corporate-governance law. FASB is funded through fees paid by publicly-listed companies and entities in the U.S.. More than half of the foundation’s revenue in 2016 came from such fees.
The scaling back of financial regulations faces opposition. The Council of Institutional Investors, an advocacy group, sent a letter to the House of Representatives Wednesday asking them to oppose the Financial Choice Act, a bill that aims to roll back both Sarbanes-Oxley and Dodd-Frank.
THE WALL STREET JOURNAL
By RHEAA RAO
May 19, 2017 7:55 am ET