Financial Accounting Standards Board Chairman Robert Herz plans to retire after more than eight years of leading the board, which will now increase in size to seven members.

He will be succeeded by FASB board member Leslie Seidman, who has been appointed acting chairman, effective Oct. 1. The board of trustees of the Financial Accounting Foundation, which oversees FASB, plans to expand the size of the board from five to seven members at that time. Until recently the board had seven members, but the number was reduced to expedite the passage of standards needed to address the financial crisis.

“My more than eight years as chairman of the FASB has been among the most professionally challenging and personally satisfying of my career,” Herz said in a statement. “There are hundreds of people I need to thank for their strong support and invaluable contributions to our standard-setting activities. First and foremost, I offer my deep appreciation to my fellow board members and our dedicated and talented staff. I’m very proud of our accomplishments and I’m confident the board will continue to successfully meet the challenges ahead.”

Herz has been working with Sir David Tweedie, chairman of the International Accounting Standards Board, to converge International Financial Reporting Standards and U.S. GAAP for over eight years. They have set a deadline of converging the major standards by the middle of next year and completing the rest of the convergence projects by the end of next year. Tweedie’s term as IASB chairman is set to expire next June. The effect of the two leaders retiring leaves the convergence effort up to their successors.

Seidman has been a FASB member since July 2003 and she recently took the lead in explaining the board’s new proposed leasing standards (see Accounting Boards Propose New Leasing Standards). Prior to joining the board, she managed her own firm, providing consulting services to major corporations, accounting firms and other concerns. She previously served as vice president of accounting policy at J.P. Morgan & Company. Seidman started her career as an auditor in the New York office of Arthur Young & Company, which is now part of Ernst & Young. She is a CPA.

Grant Thornton LLP CEO Stephen Chipman praised Herz’s service. "Bob Herz led the FASB during the most challenging time in its history,” he said in a statement. “He has been a tireless leader with an unwavering focus on the users of financial statements and we are grateful for his service to the profession and wish him well in his retirement. We also extend our congratulations to Leslie Seidman as she takes up the mantle as acting chairman and stand ready to help her and the FASB establish accounting standards that are right for the marketplace and for the dynamic organizations we serve.”

SEC Chair Mary Schapiro welcomed the change in the board's structure. "I commend the Financial Accounting Foundation for its ongoing efforts to evaluate and improve the effectiveness and efficiency of the structure and operation of the Financial Accounting Standards Board by increasing the size of the Board," she said in a statement. "The Foundation has determined that this revised structure will facilitate the continuing efforts of the FASB to work with the International Accounting Standards Board on their important convergence work plan. In addition, this should enhance the ability of the FASB to address issues facing the U.S. capital markets and the needs of investors."

"I also would like to commend FASB Chairman Robert Herz for his more than eight years of service," Shapiro added. "During his tenure, Chairman Herz has served as an effective investor advocate to improve the quality of financial reporting standards around the world. I welcome the appointment of Leslie Seidman as Acting Chairman. During this interim period, I look forward to working with Acting Chairman Leslie Seidman and the FASB as they continue their important work."

FAF Chairman Jack Brennan said the change in structure would help the convergence effort. "Returning the board to the seven-member structure will enhance the FASB's investment in the convergence agenda with the International Accounting Standards Board, while addressing the unprecedented challenges facing the American capital markets in the months and years ahead."

He congratulated Herz "on a job well done." "I want to offer my sincere thanks to Bob Herz for his strong leadership of the FASB in, arguably, the most challenging period in its history," said Brennan.

"Moving forward, we are very fortunate to have a highly respected, experienced leader like Leslie Seidman to assume the duties of Acting Chairman," he added.

Barry Melancon, president and CEO of the American Institute of CPAs, also offered his support for both Herz and Seidman. “Bob Herz played an important role in the development of accounting standards during a critical time," he said. "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 percent of the U.S. economy and deserve standards reflective of their unique user needs."