In a speechbefore Town Hall of Los Angeles, SEC Chairman Christopher Cox spoke of the need to strengthen the independence of the Governmental Accounting Standards Board(GASB) and for more SEC power to police the municipal marketplace. Recently, the GASB has been under attack by constituents questioning its existence. Recent abuses in the municipal bond markets has shown the need for greater disclosure requirements over these securities and their issuers. Mr. Cox noted about the GASB and the SEC’s power over municipal bond issuers:
The importance of the complete independence of accounting standard setters from the entities whose financial statements they regulate is a central precept of well functioning capital markets. And the need for that independence is just as great in the municipal market as it is in the corporate market.
Adherence to the Governmental Accounting Standards Board’s standards by all issuers of municipal securities is just as important as adherence to the Financial Accounting Standards Board’s standards by all corporate issuers. But under current law, the Commission does not have the same authority to require the use of proper accounting standards by municipal issuers that it does for issuers of corporate securities.
