Recently in Accounting Category

The Supreme Court has agreed to hear a challenge to the Sarbanes-Oxley Act (SOX), the 2002 act that established the Public Company Accounting Oversight Board.   Congress passed SOX in response to several high-profile instances of accounting fraud earlier this decade, most notably the Enron collapse.

The board monitors the accounting industry, especially the four largest accounting firms that handle the books for many of the most prominent corporations.  The Securities and Exchange Commission chooses the board's members, with consultation by the Fed and the Treasury Department. 

In a move that may help steady the collapsing economy (or hasten its eventual topple into the abyss), the Financial Accounting Standards Board (FASB), an independent body in charge of setting US accounting standards, is in discussions to ease so-called "mark-to-market" rules for financial institutions. 

As Reuters reports, the FASB's proposed changes will allow financial institutions to determine the value of the assets on their books during inactive markets based on what the company could get for the asset in an "orderly" transaction between market participants.  Companies previously had to value the asset according to its value on the current market (hence "mark-to-market), even if the demand for the asset was so low that it had only a minuscule market value.

The FASB is not considering this move entirely willingly.  A congressional panel told the FASB in mid-March to take action on the mark-to-market rules, or else Congress would step in and change the rules itself.  This new action by the FASB appears to be a calculated move to retain its independence and avoid more extensive changes at the hands of Congress.