The Financial Accounting Foundation's board of trustees has voted to approve sweeping changes in the oversight, structure and operations of the Financial Accounting Foundation and its two standards-setting boards, the Financial Accounting Standards Board and the Governmental Accounting Standards Board.
The FAF plans to expand the number and breadth of investors, accounting, business, financial and government organizations and entities invited to nominate FAF trustees. Final authority for all the appointments remains at the discretion of the board of trustees. The FAF is also changing the current term of trustees from one three-year term with a possible second three-year term to one five-year term.
In addition, the FAF is changing the size of its board of trustees from a fixed size of 16 trustees to a flexible range of 14 to 18 trustees. The size will be fixed by board resolution from time to time. The FAF will also increase the trustee governance activities, including the level of formal review, analysis and oversight of the data and materials regularly provided by FASB, FASAC, GASB and the Governmental Accounting Standards Advisory Council.
The board also voted to reduce the size of FASB from seven members to five, effective July 1, 2008. The board will retain the FASB simple majority-voting requirement, but affirmed the need for investor participation by broadening the current by-law requirement that FASB members possess investment experience.
The by-law will now read: "The members of the FASB shall, in the judgment of the trustees, have knowledge of investing, accounting, finance, business, accounting education and research, and a concern for the investor and the public interest in matters of investing, financial accounting and reporting."
The FAF trustees also have changed FASB's agenda-setting process to a "leadership agenda process" whereby the FASB chair is vested with the authority, following appropriate consultation, to set the FASB project plans, agenda and priority of projects.
As for GASB, the FAF trustees voted to secure a stable and permanent funding source for GASB. They want to retain the current size, term length and composition of GASB. However, they have changed GASB's agenda-setting process to a "leadership agenda process" similar to FASB's new agenda process.
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