FASB Will Get New Leadership, Bigger Board
Bob Herz is retiring as FASB’s chairman. Fellow board member Leslie Seidman has been 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. IASB Chairman Sir David Tweedie has announced that he will retire when his term ends in June 2011.
It also comes 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.
The return to a seven-member board will happen as soon board members can be recruited and seated. FAF expects that could happen in early 2011.
“Returning the Board to the seven-member structure will enhance the FASB’s investment in the convergence agenda with the [IASB], while addressing the unprecedented challenges facing the American capital markets in the months and years ahead,” FAF Chairman Jack Brennan said in the press release. “The FAF Trustees believe this is the right investment in the standard-setting process at the right time that will enable it to accomplish the many duties that are so critical to the organization’s constituents.”
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. Within four months of his arrival, FASB and the IASB would sign the Norwalk Agreement, committing to develop a single set of accounting standards that could be used internationally for domestic and cross-border financial reporting. Early in his tenure, Herz also set a goal of simplifying and improving U.S. GAAP.
“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.”
In July 2007, Herz was reappointed to a second five-year term as FASB’s chairman.
“My more than eight years as chairman of the FASB have been among the most professionally challenging and personally satisfying of my career,” Herz said in the FAF statement. “I’m very proud of our accomplishments, and I’m confident the board will continue to successfully meet the challenges ahead.”
Seidman has been a FASB member since July 2003. She has also served FASB in various staff roles. Prior to joining the board, she managed her own firm, providing consulting services to major corporations, accounting firms and other organizations, and previously served as vice president of accounting policy at J.P. Morgan & Co., according to FAF. Seidman started her career as an auditor in the New York office of Arthur Young & Co. (now Ernst & Young LLP) and is a CPA.
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