Francis M. Wheat, a corporate securities lawyer who helped spur the creation of FASB, died on July 21 in Los Angeles.
In 1964, President Lyndon B. Johnson appointed Wheat to the SEC, where he served until 1969, returning then to Gibson, Dunn & Crutcher, a Los Angeles law firm where he was a partner. Two years later, Wheat again took a leave from the firm—this time to chair an AICPA committee that was appointed to suggest improvements in the method of establishing accounting principles.
Many observers believed in 1971 that the corporate financial reporting process could not keep pace with sweeping changes in the business environment. A rapidly growing accounting profession, an abundance of public offerings, intricate new business practices and greater corporate reliance on mergers and acquisitions created an urgent need for timely accounting standards that addressed the new conditions. Doubts grew that the recognized standard setter, the AICPA Accounting Principles Board, could satisfy this requirement.
Charged by the Institute to examine the APB’s “organization and operations to determine how to get better results faster,” the Wheat committee began its work. It also was to consider whether the government or the private sector should formulate accounting principles.
The committee’s report, in 1972, proposed the replacement of the part-time, unpaid APB with a new organization—the Financial Accounting Standards Board—of paid, full-time members that would maintain standard setting as a function of the private sector.
In its report, the committee stressed the importance of ensuring the board’s independence of private interests that might interfere with its primary objective of serving the public interest. The committee therefore recommended that trustees of a newly created, independent organization—the Financial Accounting Foundation—appoint the board, which would consist of four CPA practitioners and three other members with considerable financial reporting experience.
In May of that same year, the AICPA council adopted the recommendations in the Wheat report and immediately began to implement them, which culminated in the establishment of the FASB in 1973.
Also an environmental author and activist, Wheat marshaled support for legislation that now preserves the natural state of California’s deserts.