Barney Frank once urged Financial Accounting Standards Board Chairman Bob Herz not to let the FASB become the “Slows-B” when it came to revamping accounting standards in the midst of the financial crisis, and Herz certainly isn’t being slow when it comes to his just-announced retirement.

FASB’s oversight body, the Financial Accounting Foundation, said Tuesday that Herz will be retiring from his more than eight-year tenure as chairman of the standard-setting board, with FASB board member Leslie Seidman taking over as acting chairman on Oct. 1 (see FASB Chairman Herz to Retire Next Month). Herz’s abrupt departure wasn’t explained, and it isn’t clear if he is accepting a more lucrative job offer, or if the mounting pressures of the job have finally prompted him to call it quits. Contrast that with David Costello, who announced in April that he would be retiring from his job as president and CEO of the National Association of State Boards of Accountancy, but not until January 2012.

Certainly the timing is curious. Herz was re-appointed to a second consecutive five-year term as chairman of FASB in 2007, and his term was supposed to last until July 1, 2012. Herz has been working closely with International Accounting Standards Board Chairman Sir David Tweedie on converging U.S. GAAP with International Financial Reporting Standards since 2002. But last November, they agreed to redouble their efforts to achieve convergence of the major standards by June 2011 under pressure from G-20 government leaders. More recently they have pushed back the deadline to the end of 2011 in response to complaints from some accounting groups that they would not have enough time to evaluate and comment on all the proposed standards.

Tweedie’s term is set to expire in June 2011, which is one reason for the mid-2011 goal, and it is not yet clear who will be taking over for him. With Herz gone as well, the two main proponents of the convergence effort will be out of office just as the project is supposed to reach its resolution. In mid-2011, the Securities and Exchange Commission is also supposed to decide whether sufficient progress has been made on reaching various mileposts in the work plan for incorporating IFRS into the U.S. financial reporting system before proceeding further with the convergence effort.

Interestingly, the FAF announced Herz’s retirement as chairman at the same time as it announced that the board would once again expand to seven members. The FAF shrunk the board two and a half years ago from seven to five members in order to streamline the decision-making process in the hopes of speeding up convergence. The smaller board size also helped consolidate power for Herz, who had fewer other board members to dispute his preferences. But with Herz departing FASB, the larger board size will no doubt give Seidman and the other board members a more diffuse power base.

It is not yet known who else will occupy the extra three seats on the board or whether the board will have a permanent chairman in the near future. Seidman will be assuming the post of acting chairman at a pivotal point in the convergence process, but without a full chairmanship post, her authority will be diminished compared to Herz’s, unless the FAF quickly gives her the permanent chairmanship nod. Coincidentally, the Public Company Accounting Oversight Board, probably the other most influential board in the U.S. accounting profession, also only has an acting chairman, Daniel Goelzer, right now. That may change now that the Supreme Court has finally handed down a ruling in the Free Enterprise Fund case challenging the PCAOB’s constitutionality, but the SEC has not yet given Goelzer the full chairmanship of the board.

The SEC’s role could be a factor behind Herz’s retirement as well. SEC Chair Mary Schapiro has been reluctant to give her endorsement to the IFRS roadmap bequeathed to her by predecessor Christopher Cox. Instead, she and SEC Chief Accountant Jim Kroeker have devised a detailed and complex work plan that was only recently released by the SEC for incorporating IFRS. The work plan contains a number of milestones and hurdles that the standard-setters would have to overcome before IFRS could be formally approved next year by the SEC. While the SEC has tried to appear encouraging to the convergence effort, and has set similar milestones as those envisioned in Cox’s original roadmap, it has also taken a markedly more cautious stance and has been unwilling to cede authority to an international standard-setting body like the IASB despite the establishment of a monitoring board on which Schapiro herself sits.

Another factor has undoubtedly been the considerable pressure placed on Herz and other standard-setters by politicians and lobbyists for various industries, including banking, financial services, leasing, insurance and last but not least accounting. Banking groups like the American Bankers Association and the Financial Services Roundtable have consistently protested fair value measurement standards that would devalue assets like mortgage-backed securities and loans, and even encouraged investors to send in comments critiquing the very standards that were designed to protect their interests.

Despite the overall cooperative nature of the convergence effort, FASB has differed from the IASB on how to value bank loans in their proposals for the financial instruments standards, and the two boards have both come under fire more recently for their newly unveiled standards for leasing contracts.

After crossing the ocean repeatedly since November to hammer out detailed standards in joint meetings between the two boards over oftentimes extremely arcane issues that few other people would even understand, only to be met with a flurry of critical comment letters and political pressures on both sides of the Atlantic, it’s no wonder that Herz would decide that enough is enough.

Even with the wry sense of humor he has brought to board meetings and speaking engagements at conferences across the country, it’s not an easy job for one person to handle. As one of the most powerful people in the accounting profession, he can probably write his own ticket for which firm he wants to work in, or the company or industry where he would prefer to bring his talents. All in all, he has done a commendable job of wrangling agreement out of often contentious standard-setters, regulators, and outside constituents, and his presence will surely be missed, except perhaps by those who fought hardest against the standards he tried to set.

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