Bill Overview
Title: Responsible Accounting Standards Act of 2022
Description: This bill requires the standard-setting bodies of accounting principles to comply with provisions generally required of federal agencies, including those that apply to rulemaking procedures, cost benefit analysis of certain actions, and open meeting requirements. The standard-setting bodies must also testify annually before Congress.
Sponsors: Rep. Luetkemeyer, Blaine [R-MO-3]
Target Audience
Population: Individuals impacted by changes in global accounting standards
Estimated Size: 300000000
- The bill targets standard-setting bodies of accounting principles, such as FASB (Financial Accounting Standards Board) and IASB (International Accounting Standards Board).
- These standard-setting bodies influence accounting practices globally, impacting countries that adopt their standards.
- Most large corporations worldwide adhere to GAAP (Generally Accepted Accounting Principles) or IFRS (International Financial Reporting Standards) as set by these bodies, impacting companies in various sectors.
- Professionals involved in accounting, such as auditors, financial analysts, and accountants, will see changes to how standards are set, thereby impacting their work and compliance obligations.
- Investors and stakeholders rely on accounting standards for transparency and accuracy in financial reporting, so changes in standards affect their decisions.
- On a global scale, these accounting standards affect listed companies, which means that any company that is publicly traded or prepares financial statements according to these bodies' principles will be impacted.
Reasoning
- The policy specifically targets standard-setting bodies such as the FASB and IASB, which play a critical role in setting accounting standards. The implementation of more rigorous federal-like requirements is likely to influence these organizations' operations and costs, with cascading effects on their key stakeholders.
- Due to the global and American target populations, which include all publicly traded companies, private entities adopting GAAP, and a large segment of professionals in the accounting and finance sectors, the policy may impact several million people. These impacts will largely be felt by those directly involved in accounting standards' application or indirectly through affected entities.
- The budget allows for a significant investment into these standard-setting processes and enhances transparency and compliance, potentially influencing the trust and performance metrics used by investors and market regulators.
- The simulated interviews are designed to reflect a variety of demographics within the targeted sectors and provide a sense of how these stakeholders' well-being might change over time due to these regulatory adjustments.
Simulated Interviews
Chief Financial Officer (New York, NY)
Age: 45 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 10.0 years
Commonness: 8/20
Statement of Opinion:
- Increased transparency in standard-setting is crucial; it ensures that companies like ours are well-represented.
- There might be short-term challenges adapting to new compliance measures.
- Improved standards could boost our long-term credibility with investors.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 7 |
| Year 2 | 7 | 6 |
| Year 3 | 8 | 6 |
| Year 5 | 8 | 7 |
| Year 10 | 9 | 7 |
| Year 20 | 9 | 8 |
Financial Analyst (Los Angeles, CA)
Age: 29 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 20.0 years
Commonness: 10/20
Statement of Opinion:
- The policy might increase workload initially but could enhance the financial information quality.
- Potential for more accurate investment analysis with improved standards compliance.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 6 |
| Year 2 | 6 | 5 |
| Year 3 | 7 | 5 |
| Year 5 | 7 | 6 |
| Year 10 | 8 | 6 |
| Year 20 | 9 | 7 |
Auditor (Chicago, IL)
Age: 35 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 15.0 years
Commonness: 6/20
Statement of Opinion:
- The policy could streamline auditing processes, but adaptation will require initial training.
- Aligning with federal-like regulations might lead to more consistent global practices.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 4 | 5 |
| Year 2 | 5 | 5 |
| Year 3 | 6 | 5 |
| Year 5 | 7 | 6 |
| Year 10 | 7 | 6 |
| Year 20 | 8 | 7 |
Private Business Owner (Austin, TX)
Age: 50 | Gender: female
Wellbeing Before Policy: 8
Duration of Impact: 5.0 years
Commonness: 12/20
Statement of Opinion:
- Uncertain how much more compliance will cost my business.
- Potential benefits in investor relations could offset upfront policy compliance costs.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 8 |
| Year 2 | 7 | 8 |
| Year 3 | 8 | 8 |
| Year 5 | 8 | 8 |
| Year 10 | 8 | 8 |
| Year 20 | 8 | 8 |
Private Equity Investor (Miami, FL)
Age: 42 | Gender: male
Wellbeing Before Policy: 9
Duration of Impact: 20.0 years
Commonness: 7/20
Statement of Opinion:
- Stronger standards provide better risk assurance for my investments.
- Annual testimonials increase accountability from standard setters.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 9 |
| Year 2 | 9 | 8 |
| Year 3 | 9 | 8 |
| Year 5 | 9 | 8 |
| Year 10 | 9 | 8 |
| Year 20 | 9 | 8 |
Certified Public Accountant (San Francisco, CA)
Age: 27 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 11/20
Statement of Opinion:
- This policy may increase documentation/load but also improve uniformity in accounting practices.
- Could use additional training to adapt to new compliance environments.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 6 |
| Year 2 | 6 | 5 |
| Year 3 | 6 | 5 |
| Year 5 | 7 | 6 |
| Year 10 | 8 | 6 |
| Year 20 | 8 | 6 |
Retired Financial Consultant (Seattle, WA)
Age: 55 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 5.0 years
Commonness: 8/20
Statement of Opinion:
- This approach might generate clearer standards, benefiting future financial consultants.
- Watching the transition process will be interesting but not impactful personally.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 8 | 7 |
| Year 20 | 8 | 7 |
Academia - Accounting Professor (Boston, MA)
Age: 33 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 10.0 years
Commonness: 9/20
Statement of Opinion:
- The policy could spark increased interest in accounting standards courses.
- Research might be enriched by more transparent setting processes.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 8 |
| Year 10 | 8 | 8 |
| Year 20 | 9 | 8 |
Corporate Lawyer (Houston, TX)
Age: 62 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 15.0 years
Commonness: 5/20
Statement of Opinion:
- May necessitate additional oversight in compliance checks but likely an overall benefit.
- Reduces legal uncertainties involving standard applications.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 9 | 8 |
| Year 5 | 9 | 8 |
| Year 10 | 9 | 8 |
| Year 20 | 9 | 8 |
Stock Market Investor (Dallas, TX)
Age: 40 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 15/20
Statement of Opinion:
- Better standards can offer increased confidence in where to invest.
- Might face a learning curve initially understanding new reports.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 8 | 6 |
| Year 10 | 8 | 6 |
| Year 20 | 8 | 7 |
Cost Estimates
Year 1: $25000000 (Low: $15000000, High: $35000000)
Year 2: $27000000 (Low: $16000000, High: $37000000)
Year 3: $29000000 (Low: $17000000, High: $39000000)
Year 5: $32000000 (Low: $18000000, High: $40000000)
Year 10: $35000000 (Low: $20000000, High: $45000000)
Year 100: $45000000 (Low: $35000000, High: $55000000)
Key Considerations
- Standard-setting bodies operate internationally; compliance measures might require coordination across multiple jurisdictions.
- There might be resistance from these bodies due to increased oversight and regulation.
- Understanding the true cost of compliance requires insights into each body's current funding and cost structures.