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Two lawmakers introduced legislation late Tuesday to force the Financial Accounting Standards Board to defer action on its plan to ban pooling-of-interests accounting, according to a source familiar with the bill. Initially, FASB’s ban of pooling accounting — a popular technique for booking mergers — was set to go into effect in January 2001, but the board has said its final decision on the matter would be delayed until at least March 2001. Rep. Christopher Cox, R-Calif. introduced the bill, on behalf of himself and other representatives, including Rep. Calvin Dooley, D-Calif. The bill has about a dozen co-sponsors, including House Commerce Committee chairman Thomas Bliley, R-Va., who encouraged the FASB to delay any action on pooling in a letter to the board in March. A FASB official said the board would view the legislation as interference. “We are following our due process, and if legislation is introduced, that would be interfering with our due process,” said Kim Petrone, a FASB project manager who deals with pooling and other business combinations issues. The legislation calls for the creation of a bipartisan commission that would study pooling and other related issues, including intangibles and the reliability of GAAP, or generally accepted accounting principles. The commission would report its findings to Congress within nine months of the legislations’ enactment. The moratorium would be lifted 90 days later, a source familiar with the legislation said. “We think FASB’s look at pooling versus purchase accounting is very piecemeal,” the source said. “The commission would conduct a very comprehensive study that would look at the broader issues behind financial reporting models for the New Economy.” The proposed commission would have 10 members, at least four of whom would be from the accounting profession, the source said. Under pooling-of-interests accounting for a merger or acquisition, acquiring companies avoid taking certain merger-related charges against earnings such as goodwill. Yet FASB says the accounting method makes it difficult to determine the true financials behind mergers and acquisitions. For that reason, the accounting board prefers purchase accounting, which requires the purchaser to include goodwill. Copyright (c)2000 TDD, LLC. All rights reserved.

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