Financial Accounting for Intangibles Reexamination (FAIR) Act

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 Commission and the Financial Accounting 
Standards Board should undertake a comprehensive reexamination of the 
appropriate methods of accounting for purchased and internally 
generated intangibles including goodwill, and should await the results 
of related studies of these issues.

SEC. 3. MORATORIUM ON ELIMINATION OF POOLING OF INTERESTS METHOD OF 
              ACCOUNTING.

    (a) Continued Validity of Method.--Notwithstanding 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 commission to be known 
as the Commission on Financial Accounting 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 accounting principles in 
        light of recent trends in the securities markets;
            (2) consider the impact that shortcomings in generally 
        accepted accounting principles have on securities 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 result 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 majority 
                        leader of the Senate;
                            (ii) 2 shall be appointed by the minority 
                        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 minority 
                        leader of the House of Representatives.
                    (B) From the 10 commissioners appointed, a chairman 
                shall be selected jointly by the majority leader of the 
                Senate and the Speaker of the House of Representatives.
            (2) Qualifications for membership.--
                    (A) Of the members appointed under paragraph 
                (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 members 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 members.
            (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 recommendations, 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 ``pooling of 
        interests'' refers to the method of accounting for business 
        combinations described in the Federal Accounting Standards 
        Board's APB Opinion Number 16, Business Combinations, as in 
        effect on October 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)).

Summary: States that 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 in effect on October 1, 2000.
Establishes the Commission on Financial Accounting for Intangibles to consider specified aspects of: (1) generally accepted accounting principles; (2) intangible assets; and (3) the pooling of interests method of accounting for business combinations.
Instructs the Commission to report its recommendations and conclusions to the President and Congress.