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New Era Begins at FASB

October 1, 2010

Leslie Seidman took over as acting chair of the Financial Accounting Standards Board on Friday, as the board embarks on a series of roundtable meetings designed to show that it’s listening more to the public.

Seidman is stepping in to replace Bob Herz, who abruptly resigned after leading the board for more than eight years, but nearly two years before his second term was supposed to expire. His retirement party on Tuesday evening was meant to be something of a swan song for someone who fought hard to protect the independence of the board.

FASB has come under increasing pressure from government regulators, as well as politicians, industry lobbyists, and special interests, threatening the independence of the standard-setting process. The board has not been able to tune out that pressure, and increasingly has needed to take pains to demonstrate that it is indeed listening to investors, bankers, businessmen and assorted other constituents.

FASB has received a fair share of criticism for what it has and has not accomplished over the years, as well as an unfair amount of blame for everything from the financial crisis to the unavailability of bank loans. But it’s not the only accounting board to get pelted. The Public Company Accounting Oversight Board, and its richly compensated board members, was the subject of a withering portrayal in Bloomberg BusinessWeek on Thursday, while FASB’s sister board in Norwalk, Conn., the Governmental Accounting Standards Board, was equally scorned for its coziness with government pension fund managers in The Wall Street Journal on Friday.

FASB, for its part, is trying to rebuild its reputation as it struggles to meet the self-imposed deadlines of its convergence project with the equally embattled International Accounting Standards Board. To demonstrate its willingness to take a fresh approach under new leadership and a soon-to-be-expanded board with seven members instead of five, it announced last month a series of roundtable meetings. Over the next couple of months, it will be soliciting input on its proposals to improve the standards for revenue recognition, consolidated financial statements, private company accounting and reporting issues, and accounting for financial instruments.

The feedback it hears could further disrupt and delay its convergence efforts with the IASB, but FASB is taking the chance that the SEC won’t be too upset at lengthening a convergence process that it appears to be regarding cautiously anyway. With new leadership, FASB is opening the doors in Norwalk to at least listen to what others have to say, and not just through nasty comments posted on its website.

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