Investors of the world, unite! The Motley Fool declares "mayday" on the U.S. stock markets, the most powerful capitalist force on the planet. Individual investors are increasingly important to the vitality of the stock market, yet, in terms of policy and regulation, our voices are a mere whisper compared to the organized lobbying efforts of the business, exchange, and institutional investor constituencies. Events over the last year have highlighted some significant flaws in the way that the U.S. markets are run. This is a direct threat to our economic well-being, for honest markets are certainly part of the reason that the U.S. is the destination of choice for so much capital from overseas.

Well, guess what? The markets need us, individual investors, to help keep it vital. It is our responsibility to demand that they be run in a way that is equitable, transparent, and benevolent, not just for us, but for all constituencies. We are willing to take risks that companies will succeed or fail as businesses; we should not be willing to risk that we are being deceived, or that the information we are provided is not an accurate representation of a company's economic condition.

From May 1 through today, The Motley Fool has presented its ideas for best practices in the marketplace. We hope that these ideas will stir debate among individual investors. We have set up a discussion board for just that purpose. This is the last declaration we will release.

Declaration #6:

We believe that accounting standards should be set without political interference.

Problem: At present individual investors cannot be sure that American accounting practices provide a framework upon which companies must provide accurate pictures of their financial standings. We believe that some reforms are necessary, and that the body that pursues those reforms should be able to pursue them without interference from political or partisan pressures.

Since 1973, accounting standards in the United States have not been set by a government agency, but rather by a private group known as the Financial Accounting Standards Board (FASB). The SEC has granted the FASB authority status in applying standard practices in accounting. The FASB considers recommendations from accounting firms, companies, the SEC, the public, and state and federal lawmakers to set its agenda. In general, this situation works quite well. The FASB's objective is to promote accounting standards that show the most faithful reporting of financial information, without coloring these results for the purpose of influencing investor behavior.

On several occasions, the FASB has been subjected to significant political pressure as it considered changes to Generally Accepted Accounting Principles (GAAP). These constituencies are not necessarily interested in the FASB's mission of neutral standards. In 2000, the FASB received considerable legislative pressure from Congress to forestall its decision to eliminate the "pooling of interest" acquisition accounting methodology after several influential congressmen were heavily lobbied by groups representing Silicon Valley high-tech companies who claimed that elimination of this accounting method would make mergers and acquisitions "more difficult."

Using the other method of accounting for mergers, purchase accounting added no cost whatsoever to these companies' purchases. Purchase accounting, unlike pooling, simply created significant amounts of goodwill that would need to be amortized over time.

The FASB has dealt with political pressures from Congress before -- on stock option accounting, on pensions, post-retirement benefits, and other issues. Generally speaking, the role of the FASB has been to try to make companies' reports as accurate a portrayal of reality as possible. Needless to say, many companies are opposed to any rule that takes away their ability to color their performance in the best light possible.

We see pushback at present from companies regarding proper treatment of employee stock options and on off-balance sheet information. The FASB has, in the past, set procedures in place to deal with non-cash expenses such as depreciation of assets and goodwill amortization, and yet one of the major arguments against expensing stock options is that they would be extremely difficult to price.

The fact is that companies have an unequal benefit of being able to ignore the cost of stock options for existing shareowners. Whether or not there is a cash effect, clearly such compensation affects shareowners and should be quantifiable. If faithful reporting of financial information is the FASB's goal, then this is an issue that deserves addressing -- and many important market participants, including Federal Reserve Chairman Alan Greenspan, agree. Yet there are significant constituencies exerting pressure on the FASB to reject the notion of stock options as an expense. For American accounting to remain robust, an issue that has been projected to cause an overstatement of earnings by more than 2% per year among all U.S. companies is important enough to be reviewed.

The FASB is an experiment in self-regulation; it is not a governmental body. But in order for the FASB to be able to provide the best protection possible to investors, it must be able to exercise its judgment. Where Congress and other regulatory bodies impede the ability of the FASB to self-regulate, the entire accounting system is undermined. Such actions are rarely done at the behest of the individual investors. More often, it is the companies that do not want the light of day shined on certain practices that squawk the loudest whenever the FASB considers a change.

What to do now
More than 50% of all American households own stock in publicly traded companies. Although our ability to show a unified front is constrained relative to the concentrated lobbying efforts of corporations, we individual investors form a massive constituency. In situations where legislators attempt to interfere with the workings of the FASB, they may be receiving significant input from corporate lobbying groups. Write your congressional representatives. Let them know that your financial best interests are served when the FASB can make decisions absent of such interference. Let 'em know that you vote, and that you expect your legislators to support the FASB's judgment.

This is a call to action. We intend to make the opinions of individual investors heard about issues that directly affect their ability to participate in the public markets. Please take a moment to comment on this and the all previous Manifesto points, even if just to say, "Hear, hear!" or "I agree and would further say..." or  "I disagree because.... " We will deliver these comments to the SEC, members of Congress, and the exchanges prior to the SEC Investor Summit scheduled for May 10.

What would YOU ask the SEC?
Our own Bill Mann (TMF Otter) will be a panelist at the Summit this Friday. This is your chance to make your voice heard. What would you like to ask the SEC? Submit your questions to manifesto@fool.com and Bill will try to present as many as he can to SEC Chairman Harvey Pitt and the other members of the panel.