This case consists of a letter from Dennis R. Beresford, chairperson of the Financial Accounting Standards Board, to Senator Joseph I. Lieberman. The specific issue was proposed legislation relating to the accounting for employee stock options.

Required

a. “Financial statements must provide a neutral scorecard of the effects of transactions.” Comment.

b. “Costs of transactions exist whether or not the FASB mandates their recognition in financial statements.” Comment.

c. In the United States, standard setting is in the private sector. Comment.

d. Few, if any, accounting standards are without some economic impact. Comment.