As the effective date of March 1 for sequestration approaches, we continue to learn more about its scope. Surprisingly, the Financial Accounting Standards Board (FASB) will feel the pain of the sequester too.
The FASB, unlike the Treasury cash grant program, is not taxpayer funded. The Securities and Exchange Commission (S.E.C.) has delegated to the FASB the responsibility to promulgate generally accepted accounting principles (GAAP).
To provide funding for the FASB, the S.E.C. charges public companies a fee that it funnels to the FASB. The pass through of that fee is subject to sequestration.
Apparently, the sequestration will apply to $1.3 million of the FASB’s funding, which is 5.1 percent of the estimated $25.5 million in fees collected by the S.E.C. for the FASB.1 Teresa Polly, President of the Financial Accounting Foundation said, “This came as a surprise to us.” 2 Many in the renewables energy industry felt the same way upon learning from the Office of Management & Budget that they too were in the sequester’s sights.
The funding for the FASB was mandated in 2002 by the Sarbabes-Oxley Act to ensure the FASB had the means to be financially independent of the accounting industry.