I
106TH CONGRESS
2D SESSION
H. R. 5365
To impose a temporary moratorium on the elimination of the existing ‘‘pooling
of interests’’ method of accounting for business mergers and acquisitions,
and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
OCTOBER 3, 2000
Mr. COX (for himself, Mr. BLILEY, Mr. TAUZIN, Mr. DREIER, Mr. DAVIS of
Virginia, Mr. GOODLATTE, Mr. WELLER, Mr. DOOLEY of California, Ms.
ESHOO, Mr. MORAN of Virginia, Mr. SMITH of Washington, Mr. CROW-
LEY, and Mr. GONZALEZ) introduced the following bill; which was re-
ferred to the Committee on Commerce
A BILL
To impose a temporary moratorium on the elimination of
the existing ‘‘pooling of interests’’ method of accounting
for business mergers and acquisitions, and for other pur-
poses.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Financial Accounting
for Intangibles Reexamination (FAIR) Act’’.
SEC. 2. SENSE OF CONGRESS.
It is the sense of the Congress that, prior to changing
existing rules of accounting for business combinations and
intangible assets, the Securities and Exchange Commis-
sion and the Financial Accounting Standards Board
should undertake a comprehensive reexamination of the
appropriate methods of accounting for purchased and in-
ternally generated intangibles including goodwill, and
should await the results of related studies of these issues.
SEC. 3. MORATORIUM ON ELIMINATION OF POOLING OF IN-
TERESTS METHOD OF ACCOUNTING.
(a) CONTINUED VALIDITY OF METHOD.—Notwith-
standing any other provision of law, for purposes of any
financial statement, report, or other document required
under any of the securities laws, the availability and use
of the pooling of interests method of accounting for any
business combination shall be determined in accordance
with generally accepted accounting principles as in effect
on October 1, 2000 .
(b) DURATION OF MORATORIUM.—This section shall
take effect upon the date of the enactment of this Act and
shall remain in effect until 90 days after the date of the
submission of the report required by section 4(e).
SEC. 4. FURTHER STUDY.
(a) ESTABLISHMENT.—There is established a com-
mission to be known as the Commission on Financial Ac-
counting for Intangibles (referred to in this section as the
‘‘Commission’’).
(b) DUTIES.—The Commission shall—
(1) consider the general usefulness of financial
statements prepared under generally accepted ac-
counting principles in light of recent trends in the
securities markets;
(2) consider the impact that shortcomings in
generally accepted accounting principles have on se-
curities market volatility, capital allocation, and the
investment of retirement fund assets, both individual
and institutional;
(3) consider methods to better identify, value,
and account for purchased and internally generated
intangible assets;
(4) examine the general questions surrounding
the role of intangible assets in financial reporting in
the economy; and
(5) consider the economic impact that would re-
sult if the pooling of interests method of accounting
for business combinations were eliminated.
(c) MEMBERSHIP.—
(1) NUMBER AND APPOINTMENT.—
(A) The Commission shall be composed of
10 individuals, of which—
(i) 3 shall be appointed by the major-
ity leader of the Senate;
(ii) 2 shall be appointed by the minor-
ity leader of the Senate;
(iii) 3 shall be appointed by the
Speaker of the House of Representatives;
and
(iv) 2 shall be appointed by the minor-
ity leader of the House of Representatives.
(B) From the 10 commissioners appointed,
a chairman shall be selected jointly by the ma-
jority leader of the Senate and the Speaker of
the House of Representatives.
(2) QUALIFICATIONS FOR MEMBERSHIP.—
(A) Of the members appointed under para-
graph (1)(A), 4 shall come from the accounting
profession.
(B) The remainder of such members shall
be experts capable of carrying out the duties
described in this section.
(3) DEADLINE FOR APPOINTMENT.—All mem-
bers of the Commission shall be appointed by no
later than December 31, 2000.
(4) TERMS OF APPOINTMENT.—The term of an
appointment to the Commission shall be for the life
of the Commission.
(5) VACANCY.—
(A) A vacancy on the Commission shall be
filled, not more than 30 days after notice of the
vacancy is given to the Commission, in the
same manner in which the original members
were selected.
(B) A vacancy shall not affect the power of
the remaining members to execute the duties of
the Commission.
(d) PROCEDURE.—
(1) MEETINGS.—The Commission shall meet at
the call of its chairman or a majority of its mem-
bers.
(2) QUORUM.—A quorum shall consist of 7
members of the Commission.
(e) REPORT.—Not later than 9 months after the date
of the enactment of this Act, the Commission shall submit
a report to the President and Congress which shall contain
a detailed statement of the Commission’s recommenda-
tions, findings, and conclusions, and may contain minority
or individual member’s views.
(f) TERMINATION.—The Commission shall terminate
not more than 30 days after the date of submission of
the report required in subsection (e).
SEC. 5. DEFINITIONS.
For purposes of this Act:
(1) POOLING OF INTERESTS.—The term ‘‘pool-
ing of interests’’ refers to the method of accounting
for business combinations described in the Federal
Accounting Standards Board’s APB Opinion Num-
ber 16, Business Combinations, as in effect on Octo-
ber 1, 2000.
(2) SECURITIES LAWS.—The term ‘‘securities
laws’’ has the meaning given such term in section
3(a)(47) of the Securities Exchange Act of 1934 (15
U.S.C. 78c(a)(47)).
Æ