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About Accounting:

Nothing is more important in the setting of security prices than accurate, relevant, unbiased and timely information about the issuer’s activities, expressed through financial reporting.


That’s where accounting matters. In my view, the current US accounting standard setter, the Financial Accounting Standards Board (FASB), is far superior to the standard setter it replaced almost fifty years ago. Yet in recent years, FASB has devoted much of its efforts to simplification of its standards and moved away from initiating projects that would provide greater informational benefits to investors.


In late 2020, five persons with accounting backgrounds, and possessing various experiences in the capital markets, met online and discussed recent FASB output and agenda decisions. They found much that concerned them, and joined together in writing a letter setting out their concerns to the Financial Accounting Foundation (FAF) and to the Securities & Exchange Commission.  


The writers called themselves the “Alliance of Concerned Investors.” I hope you would find their letter thought-provoking. The letter can be found in this link:



The letter was re-sent to newly installed SEC Chairman Gary Gensler in April, 2021. That particular correspondence may also interest you and can be found at this link:


On March 31, 2022, the SEC issued Staff Accounting Bulletin 121, regarding accounting and disclosure practices applied to cryptocurrencies. The Alliance of Concerned Investors issued a letter in support of the SEC's action, found at this link:

Another very direct message to the Financial Accounting Foundation was sent on April 9, 2021 by a pair of accounting analysts at the Capital Group/American Funds. It can be found at this link:


These letters are presented here because the correspondence is not publicly available on the FAF, FASB or SEC websites. These letters, and others, should be of interest to investors. Posting them here provides a single web-stop for finding food for thought about the state of rule-making and oversight of the accounting profession.


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Other correspondences that illustrate investors’ desires for more representation in the accounting standard-setting process and financial regulation appear below.


The Council of Institutional Investors also wrote to Chairman Gensler in April, 2021, and voicing their hope that the new SEC Chief Accountant will have “a deep understanding and appreciation for the needs of investors.” The link to the letter can be found here:

Public Company Accounting Oversight Board (PCAOB) Letters

The PCAOB has been in turmoil for the past several years, and much has been happening lately. The following letters discuss the Board’s shortcomings, illustrating the need for recent changes at the Board level.

- After the PCAOB was reconstituted in early 2022, the Alliance of Concerned Investors drafted recommendations for action by the Board. The link to the letter can be found here.


- This is an open letter to SEC Chairman Gary Gensler, posted in the Harvard Law School Forum on Corporate Governance. This letter is notable not just for its content, but because it was signed by former members of the Public Company Accounting Oversight Board (PCAOB or Board) Investor Advisory Group (IAG).



- The Project On Government Oversight sent this letter on May 26, 2021 to Gary Gensler, which carried the same message as the one above, but with an added grievance: the “revolving door” problem with the Big Four and their regulators. For more on the revolving door problem, see this commentary by the Revolving Door Project.


- A call to Gary Gensler for reforming not just the PCAOB, but for reforming the entire financial reporting infrastructure from a group of interested academics, former regulators and investors, and including all members of the Alliance of Concerned Investors.

- Finally, this letter from Senators Warren and Sanders on May 25, 2021 called upon SEC Chairman Gensler “to immediately remove and replace the sitting members of the Public Company Accounting Oversight Board (PCAOB).” On June 4, 2021, he began that process with the firing of Chairman William Duhnke III.

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