Robert Herz announced his retirement as FASB’s chairman. Fellow board member Leslie Seidman was appointed acting chairman, effective Oct. 1, according to a press release issued by the Financial Accounting Foundation, FASB’s parent organization.
Along with the leadership change, FAF announced that FASB is reverting from its current five-member board makeup to seven members. FASB previously operated with seven board members from its inception in 1973 until 2008.
The changes come at a time when FASB and its international counterpart, the International Accounting Standards Board, are racing the clock on a series of standards convergence projects.
They also come against a backdrop of discussion about private company financial reporting. An 18-member blue-ribbon panel created by the AICPA, FAF and the National Association of State Boards of Accountancy is working to make recommendations by December about the future of standard setting for private companies.
Herz led FASB for more than eight years. The former PricewaterhouseCoopers chief technical partner took the helm at FASB on July 1, 2002, just weeks before the Sarbanes-Oxley Act was signed into law.
“Bob Herz played an important role in the development of accounting standards during a critical time,” Barry C. Melancon, president and CEO of the AICPA, said in a statement. “As FASB chairman, he pushed for more disclosure and better reporting on behalf of investors. The entire profession is grateful for his service. His intellect and humor will be missed. We look forward to working with Acting Chairman Leslie Seidman and three new members to be named to the board as they grapple with converging U.S. and international standards. Now more than ever, it is imperative that the Financial Accounting Foundation, working with the blue-ribbon panel, find an innovative solution to the problem of addressing the need for private company standard setting in the United States. Private companies represent 50% of the U.S. economy and deserve standards reflective of their unique user needs.”
The PCAOB adopted a suite of eight auditing standards, Auditing Standards (AS) no. 8 through no. 15, that the board said would enhance the effectiveness of the auditor’s assessment of, and response to, the risks of material misstatement in financial statements. The risk assessment standards address audit procedures performed throughout the audit, from the initial planning stages through the evaluation of audit results. The standards, if approved by the SEC, will be effective for audits of fiscal periods beginning on or after Dec. 15, 2010.
The PCAOB initially proposed a suite of standards on Oct. 21, 2008. After making changes in response to comments, the PCAOB reproposed the standards (tinyurl.com/375cca9) on Dec. 17, 2009. The reproposed document contained seven standards, but the final standards separated planning (AS9) and supervision (AS10). PCAOB Acting Chairman Daniel Goelzer said in an official statement (tinyurl.com/2f56rr8) to the board that “a separate supervision standard … affords a better platform for future development of the concept of supervision.” He said the audit planning standard “has been revised to better take into account multi-location engagements in which part of the work is performed by other auditors.” Goelzer’s statement made clear that further standard setting is likely in each area.
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