OFFICE OF THE SECRETARY

RECEIVED ~

JUN 2 9 2026

OFFICE OF THE SECRETARY

Truth in Accounting

June 16, 2026

Vanessa Countryman, Secretary

Securities and Exchange Commission

100 F Street, NE

Washington, DC 20549-0609

Dear Secretary Countryman,

Truth in Accounting (TIA), a nonpartisan 501(c)(3) organization dedicated to promoting

transparent government financial reporting and exposing the true costs of unfunded liabilities to

taxpayers, writes to express strong concerns regarding the GASB Accounting Support Fee and

the broader role of the Governmental Accounting Standards Board (GASB) itself.

We have reviewed the long-ago written (2012) comment letter submitted by the Securities

Industry and Financial Markets Association (SIFMA) opposing FINRA’s proposed rule change to

establish the GASB Accounting Support Fee.

The rulé change was actually initiated by Congress, not FINRA, to create a permanent funding

source for the GASB. Congress added a provision to the Dodd-Frank Act of 2010 that required

“accounting support fees” to be included in the sale of municipal bonds. This “stealth tax” has

extracted over $35.8 million from the market economy in the past two years alone.

TIA fully agrees with SIFMA’s critique that the fee represents an unfair tax on broker-dealers

and municipal bond investors, who should not have to subsidize GASB’s operational existence.

SIFMA rightly highlighted inequities in allocation, lack of budget oversight (“taxation without

representation”), disparate impacts on dealers, and the absence of a nexus for many bond

obligors that do not follow GASB standards

TIA goes one step further in the interest of the American taxpayer: We question the ongoing

necessity of GASB as a standard-setting body and urge the SEC to support scrutiny of its rules

and/or existence.

GASB’s standards enable governments to obscure the full scope of liabilities, particularly

pensions and Other Post-Employment Benefits (OPEB), through modified accrual (cash-basis)

accounting in governmental fund statements. This creates a self-destructive loop: GASB

promulgates rules that obscure the truth about the very pension obligations bond buyers invest

in, while the industry is forced to fund GASB’s operations. The result harms transparency,

distorts fiscal decision-making, and burdens future taxpayers.

Governments should follow the same rigorous, full-accrual accounting standards applied

to corporations and families—reporting all liabilities, including pensions, OPEB, and

infrastructure, on a consistent basis. Private-sector standards (under FASB) and federal

practices (under FASAB principles) provide clearer pictures of economic reality. GASB’s

approach, by contrast, is obsolete for modern accountability needs and perpetuates misleading

“balanced budget” claims that ignore long-term obligations.

Other organizations have echoed similar concerns that GASB’s standards lack sufficient

transparency regarding pensions, infrastructure, and long-term fiscal sustainability, including the

California Policy Center, the Commonwealth Foundation, representatives of the Illinois Society

of CPAs, and taxpayer advocates aligned with groups such as Americans for Tax Reform.

The Dodd-Frank provision creating this funding mechanism was intended to provide sustainable

support, but it has instead entrenched a flawed system at a high cost to market participants,

without delivering truthful reporting to the public. We respectfully urge the SEC to:

1. Re-examine the GASB Accounting Support Fee and its implementation.

. Support broader scrutiny of GASB’s necessity and standards.

3. Advocate for unified, full-accrual accounting that serves taxpayers, investors, and the

integrity of our financial markets.

TIA stands ready to provide additional data, analyses of state financial reports, or to participate

in any review process. Thank you for your attention to this critical matter of public interest and

market fairness.

Sincerely, /). YL,

ee a / [1

Judi Willar

Executive Director, Truth in Accounting

217-801-5821

www.truthinaccounting.org

Invested in America

January 30, 2012

Elizabeth M. Murphy, Secretary

Securities and Exchange Commission

100 F Street, NE

Washington, DC 20549-0609

Re: _ File No. SR-FINRA-2011-073: Notice of Filing of Proposed Rule

Change Relating to Establishing a Governmental Accounting

Standards Board Accounting Support Fee

Dear Ms. Murphy:

The Securities Industry and Financial Markets Association (“SIFMA”)'

appreciates the opportunity to provide comments to the Securities and Exchange

Commission (“SEC”) on the Financial Industry Regulatory Authority’s

(“FINRA”) proposed rule change to create new Section 14 (Accounting Support

Fee for Governmental Accounting Standards Board) (the “GASB Accounting

Support Fee”) under Schedule A to the FINRA By-Laws. FINRA’s proposal is a

result of Section 978 of the Dodd-Frank Wall Street Reform and Consumer

Protection Act (“Dodd-Frank Act”) requiring a funding mechanism for GASB.

While SIFMA supports the mission of the Governmental Accounting

Standards Board (“GASB”) “to establish and improve standards of state and

local governmental accounting and financial reporting that will...result in useful

information for users of financial reports..." ° and appreciates the role that GASB

' SIFMA brings together the shared interests of hundreds of securities firms, banks and asset

managers, SIFMA’s mission is to support a strong financial industry, investor opportunity, capital

formation, job creation and economic growth, while building trust and confidence in the financial markets.

SIFMA, with offices in New York and Washington, D.C., is the U.S. regional member of the Global

Financial Markets Association (GFMA).

* The GASB is an independent body created in 1984 pursuant to agreement among the Financial

Accounting Foundation (“Foundation”); the American Institute of Certified Public Accountants (AICPA);

the Council of State Governments; the Government Finance Officers Association; the International

City/County Management Association; the National Association of Counties; the National Association of

State Auditors, Comptrollers and Treasurers; the National Conference of State Legislatures; the National

League of Cities; the National Governors’ Association; and the U.S. Conference of Mayors.

3 See, GASB Mission Statement available at

http://www.gasb.ore/jsp/GASB/Page/GASBSectionPage&cid=1 175804850352 .

New York | Washingion

120 Broadway, 35th Floor | New York, NY 10271-0080 | P: 212.313.1200 | F: 212.313.1301

www.sifma.org

Elizabeth M. Murphy

Securities and Exchange Commission

Page 2 of 8

plays developing separate uniform accounting and reporting standards for

governments’, SIFMA believes that FINRA’s proposal” is not a fair and equitable

manner to assess the GASB Accounting Support Fee and objects to the proposed

methodology for assessing the GASB Accounting Support Fee. Accordingly, we

urge the SEC to reject or disapprove the proposed rule change.

SIFMA believes that FINRA’s proposed methodology for assessing the

proposed GASB Accounting Support Fee is not fair and equitable for the

following reasons:

e The proposal is an unfair tax on broker dealers and municipal bond

investors who should not be mandated to subsidize the entire

expense of financially supporting GASB.

@ There are many other end users of GASB’s accounting and

financial reporting standards, such as non-debt issuing

municipalities, financial advisors, banks, bank dealers, insurance

companies, rating agencies, mutual funds, legislative/governmental

staff, and taxpayer organizations that get a “free ride” under

FINRA’s proposed methodology.

e The current proposal provides a blank check for GASB. There is

no direct or indirect independent budget oversight — in effect

“taxation without representation” with no incentive for

transparency or fiscal discipline.

° Many municipal bond obligors are not GASB reporting entities.

Many municipal bond obligors are private non-profit corporations,

and thus are subject to the rules of The Financial Accounting

Standards Board (“FASB”)°, not GASB. This proposal makes no

* See, GASB White Paper dated March 16, 2006, “Why Governmental Accounting and Financial

Reporting is — and should be — Different”, available at

http://www. gasb.org/cs/ContentServer?c=GASBContent_C&pagename=GASB%2FGASBContent _C%2F

GASBNewsPage&cid=1 176156736250

> Pursuant to Regulatory Notice 11-28, “under proposed Section 14, the GASB Accounting

Support Fee would be allocated among FINRA member firms based on municipal securities transactions

reported to the Municipal Securities Rulemaking Board (MSRB). Specifically, each calendar quarter, each

member firm would be required to pay an assessment to FINRA of its portion of one quarter of the annual

GASB Accounting Support Fee amount that reflects the firm’s portion of the total par value of municipal

securities sales reported by FINRA members to the MSRB under MSRB Rule G-14(b) in the previous

calendar quarter.” [internal citation to MSRB Rule G-14(b) deleted]

® FASB was established in 1973 by the Foundation to establish and improve standards of financial

accounting and reporting for nongovernmental entities. FASB does have its own revenue stream

legislatively mandated by Section 109 of the Sarbanes-Oxley Act of 2002 through fees collected assessed

against and collected from issuers of securities, as those issuers are defined in the Act.

Elizabeth M. Murphy

Securities and Exchange Commission

Page 3 of 8

distinction between bonds issued by GASB obligors, bonds issued

by FASB obligors and bonds with obligors who follow neither set

of standards. It would be inappropriate to tax transactions in bonds

issued by obligors that do not utilize GASB standards.

e The proposed fee unfairly burdens certain dealers and is not

allocated equitably. Any accounting support fee should be

business model/operationally neutral, and FINRA’s proposal is

not. Not all trades reportable to the Municipal Securities

Rulemaking Board’s (MSRB) Real-Time Transaction Reporting

System involve customers. Additionally, as currently proposed by

FINRA, under certain circumstances multiple assessments will be

due from a single purchase and sale. Supply chains that involve

multiple dealer trades will also be more heavily impacted. Finally,

bank dealers’ municipal securities transactions are not covered by

FINRA’s proposal, as they are not FINRA members.

e Although existing FINRA member regulation and fees make

adding this tax relatively easy for FINRA, such convenience does

not outweigh the inequities listed above.

While we recognize that the SEC, and FINRA, is bound by the statutory

provisions governing the GASB support fee, we feel that the SEC and FINRA can

make significant changes to the proposed fee and still be in compliance with the

statute. SIFMA proposes that any GASB support fee should more closely mirror

the way FASB is funded and should be structured such that the dealer payors

could pass through any GASB support fee to parties that use or benefit from

GASB’s rules to a greater degree, including municipal bond investors or issuers.

In the alternative, the fee could based upon a combination of underwriting and

trading volume. If the SEC moves forward with an assessment based upon an

underwriting assessment or trades submitted to the MSRB, SIFMA proposes that

the MSRB, not FINRA, administer such a support fee as the MSRB regulates both

bank dealers’ and broker dealers’ municipal securities activities; FINRA only

regulates broker dealer activities.

IL. Unfair Tax on Dealers and Investors

The proposal is an unfair tax on broker dealers who should not be

mandated to subsidize the entire expense of financially supporting GASB. The

true beneficiaries of GASB’s work are the myriad of state and local governments

that follow its accounting and reporting standards, investors who benefit from

sound financial reporting rules, rating agencies who are consumers of municipal

Elizabeth M. Murphy

Securities and Exchange Commission

Page 4 of 8

financial statements, and auditors whose work revolves around GASB’s generally

accepted accounting principles. It is these entities that should directly fund

GASB’s operations. Because the statute specifies dealers as the collection

mechanism, FINRA should structure the fee so that the burden could be

ultimately borne by those who more directly use or benefit from GASB’s rules.

I. GASB Reporting is used for many purposes, not to solely to

access capital markets

There are many end users of GASB’s accounting and financial reporting

standards other than issuers of municipal securities and the other entities listed

above, such as non-debt issuing municipalities, financial advisors, banks, bank

dealers, insurance companies, mutual funds, legislative/governmental staff, and

taxpayer organizations. It is important to note that some state and local

governments rarely or never issue debt. These diverse entities that use GASB

generally accepted accounting principles for a variety of purposes get a “free ride

without paying the fare to financially support GASB under the proposed

methodology. Financial support of GASB should come from the entire universe

of users, not just broker dealers.

29

It. Many municipal bond issuers do not follow GASB; some follow

FASB

Adherence to GASB standards by state and local governments is voluntary

and there are numerous states and local governments that do not follow GASB’.

Two notable examples of non-GASB followers are governments in New Jersey

and Texas, where the states produce their own accounting standards. Additionally,

municipal bond obligors that are private, nonprofit corporations such as hospitals,

universities, and cultural institutions also do not follow GASB, but instead follow

the accounting and financial reporting standards of FASB. There is no reasonable

basis, nexus, or justification for the bondholders of these entities (or even the

entities themselves) to financially support the activities of GASB. If dealers are

required to fund GASB, they should enjoy some certainty that GASB’s work

product will be adhered to.

” See, Report of the United States Government Accountability Office (GAO), January 18, 2011,

Dodd-Frank Wall Street Reform Act: Role of the Governmental Accounting Standards Board in Municipal

Securities Markets and its Past Funding, available at http://www.gao.gov/new.items/d11267r.pdf (“GAO

Report”). See also W.R. Baber and A.K. Gore, Consequences of GAAP Disclosure Regulation: Evidence

Jrom Municipal Debt Issuances, (October 2007).

Elizabeth M. Murphy

Securities and Exchange Commission

Page 5 of 8

IV. No Independent Budget Oversight — “Taxation without

Representation”

Currently, the GASB Chairman is responsible for preparing GASB’s

annual budget, with the advice of the members of GASB, for approval by the

Financial Accounting Foundation’s Board of Trustees — a reasonable process

when GASB was responsible for funding its own budget. Neither FINRA’s GASB

Accounting Support Fee proposal or the Securities and Exchange Commission’s

(SEC) order® directing funding for GASB contain a provision for independent

direct or indirect oversight of GASB’s budget going forward. This is inconsistent

with the SEC’s oversight and review of the annual budget of FASB, GASB’s

sister organization. As noted by the GAO Report issued in the course of reviewing

the role of GASB in the municipal securities market and its past funding:

e Several stakeholders were concerned with the level and nature

of GASB’s expenditures—such as the amounts spent on staff

salaries and office space—as well as a perceived lack of

transparency associated with its budget process.

e Stakeholders expressed mixed views on whether certain GASB

projects and initiatives were redundant with FASB projects or

fell outside of what they considered the scope of GASB’s

mission of promulgating governmental accounting principles.

For example, several stakeholders expressed concern regarding

GASB’s work on accounting for certain retirement benefits,

referred to as Other Post-Employment Benefits, while others

voiced support for it.’

Accordingly, at a minimum, some independent oversight of GASB’s

budget should be implemented to encourage transparency and fiscal discipline.

V. Disparate Impact on Certain Dealers

The proposed fee unfairly burdens certain dealers. A key component of

FINRA’s submission to the SEC, as well as Regulatory Notice 11-28, is that

FINRA anticipates that firms may seek to pass the GASB Accounting Support

Fee onto customers engaged in municipal securities transactions. However, many

transactions reported to the MSRB pursuant to Rule G-14(b) do not involve

customers. Examples of reportable trades which do not involve a customer are

dealer to dealer trades and trades involving broker’s brokers. This would result in

some dealers being able to pass through the fee to customers and others not.

® Securities Act of 1933, Release No. 9206/May 11 2001 and Securities and Exchange Act of

1934 Release No. 64462/May 11, 2011 available at http://www.sec.gov/rules/other/2011/33-9206.pdf

? See GAO Report, supra note 7, at 33.

Elizabeth M. Murphy

Securities and Exchange Commission

Page 6 of 8

Additionally, for these types of reportable trades, including supply chains that

involve multiple broker dealer trader trades, each counterparty reports the trade

under MSRB G-14(b) — resulting in a multiple assessment for a single purchase

and sale. Finally, bank dealers’ municipal securities transactions are not covered

by FINRA’s proposal because they are not subject to regulation, examination, or

enforcement by FINRA and do not pay any FINRA fees. Accordingly, SIFMA

believes the proposed GASB Accounting Support Fee unfairly burdens certain

dealers and is not a fair and equitable allocation among participants in the

municipal market.

Vi. FINRA Administrative Fee is Unwarranted

The proposed $50,000 fee that has been budgeted to pay FINRA” to

administer the GASB Accounting Support Fee is unwarranted. First of all,

FINRA already has a process for collecting its own Trading Activity Fee from

broker dealers, and could easily amend this process to include the GASB

Accounting Support Fee'’. Alternatively, in the event that FINRA moves forward

with this assessment based upon an underwriting assessment or trades submitted

to the MSRB, the MSRB could also administer the fee for minimal costs as it

already has the staffing and information to calculate, assess, and collect

underwriting assessments as well as transaction and technology assessments

pursuant to MSRB Rule A-13.

ALTERNATIVE FEE PROPOSAL

Vil. Mirror FASB Funding Model: Pass Through of Support Fee

on Underwriting Assessments

FINRA’s submission to the SEC, as well as Regulatory Notice 11-28,

anticipates that some firms may seek to pass the GASB Accounting Support Fee

onto customers engaged in municipal securities transactions and provides some

guidance on proper disclosure. Principles of fundamental fairness would dictate

dealers be allowed to pass through any GASB support fee to municipal bond

issuers instead of or in addition to investors. This would more closely follow how

FASB is funded, which is primarily through an accounting support fee pursuant to

the Sarbanes-Oxley Act of 2002. This FASB fee is allocated among securities

'° See Regulatory Notice 11-28 at Endnote 5.

" http://www. finra.org/web/groups/industry/@ip/@reg/@guide/documents/industry/p 123850.pdf

Elizabeth M. Murphy

Securities and Exchange Commission

Page 7 of 8

issuers based on each issuer’s proportional market capitalization. The easiest way

to implement this would be to structure a GASB support fee as an underwriting

assessment on all municipal securities (or potentially just on bonds with GASB

reporting obligors) purchased by a dealer from an issuer as part of a primary

offering. The MSRB currently assesses and collects an underwriting assessment

to fund its own operations pursuant to MSRB Rule A-13(b). We understand that

FINRA is bound to not collect any more or less in any period than the amount

GASB states it needs to fund its budget. However, we feel confident that if this

methodology is chosen, then the self-regulatory organization that collects the fee

can essentially escrow any overages and revise the fee in future period to adjust

for the variability in new issue volume.

VIII. Conclusion

SIFMA sincerely appreciates the opportunity to comment on the Proposal.

While SIFMA supports the mission of GASB, we object to FINRA’s proposed

methodology for assessing the proposed GASB Accounting Support Fee because

it unfairly burdens certain dealers and is not a fair and equitable manner to assess

the fee for the reasons set forth above. SIFMA proposes that the GASB support

fee be more closely mirrored on FASB’s funding model, allowing dealers to pass

through any GASB support fee to those parties who use or benefit from GASB’s

work to a greater extent than dealers, such as municipal bond investors, issuers,

rating agencies, auditors, and others. If FINRA moves forward with an

assessment based upon an underwriting assessment, mirrored on MSRB Rule A-

13(b) or trades submitted to the MSRB, SIFMA proposes that the MSRB

administer such support fee as the MSRB governs all transaction in municipal

securities.

Please do not hesitate to call me with any questions at 212-313-1265.

Sincerely yours,

David L. Cohen

Managing Director

Associate General Counsel

Elizabeth M. Murphy

Securities and Exchange Commission

Page 8 of 8

CC:

Financial Industry Regulatory Authority

Mac Northam, Director of Fixed-Income Regulation

Municipal Securities Rulemaking Board

Lynnette Kelly, Executive Director

Ernesto Lanza, Deputy Executive Director and Chief Legal Officer

Peg Henry, General Counsel - Market Regulation

a a

Truth in Accounting

PO. Box 580, Glencoe, IL. 60022

Transforming government through accounting!