The Financial Accounting Standards Board, whose job is to solve accounting problems by writing new accounting rules, has been accused of stealing an innovative accounting idea.
Silicon Economics
filed suit in federal district court in San Jose, Calif., alleging FASB violated antitrust rules and tried to “misappropriate patented technology,” the company said in a statement regarding the suit. According to the company, FASB hijacked Silicon Economics’ patented “EarningsPower Accounting,” billed as a method of accounting that improves the accuracy, validity, and usefulness of financial statements by addressing some of the shortcomings of fair-value accounting.
The company describes itself as a firm that conducts fundamental research and development in finance and accounting and develops and markets technologies that improve economic decision making. It
sent a letter to FASB in 2006 touting the merits of the method in response to a
request for comments related to FASB’s conceptual framework, which it is writing in collaboration with the International Accounting Standards Board.
SEI says FASB claims the terms and conditions of its Website and e-mail give FASB ownership over ideas that are submitted to the board through its comment process. FASB declined to comment on the suit because it is a pending legal matter.
Bruce Pounder, chairman of the Small Business Financial and Regulatory Affairs Committee for the Institute of Management Accountants, says it’s possible for accounting pioneers to patent management accounting methods, especially in the past decade. The American Institute of Certified Public Accountants has been an ardent opponent of patenting tax strategies.