The Financial Accounting Foundation said that it will give the Securities and Exchange Commission the opportunity to propose and review candidates for open positions at either the foundation, or the board the foundation oversees, the Financial Accounting Standards Board.
Both the FAF and the SEC have publicly characterized the change as merely a formalization of the procedure already in place.
Under the arrangement, the FAF will advise the SEC's Office of the Chief Accountant of its list of candidates 45 days before a meeting to consider an appointment or reappointment to the FASB or FAF Board of Trustees. During that time, SEC commissioners may provide a list of alternate candidates for the foundation to consider.
The kerfuffle came to a head in December, when the foundation presented the SEC with a list of final appointments to its own board and the FASB. The lack of a heads-up led the SEC to complain that such notification was inconsistent with the spirit of a policy statement the commission issued in 2003. In that statement, the SEC said that as part of its oversight responsibilities, FASB should give the SEC "timely notice of, and discuss with the Commission" its intention to appoint new members.
According to published reports, the SEC originally wanted to formalize its role in the FASB appointments process, but many of the foundation’s members said such a move could jeopardize the FASB's independence
Specifically, in a memo sent to the SEC, the foundation has formally agreed to now:
- Follow a specific timetable for notifying the commission of potential appointments and reappointments to the FASB and its own board;
- Give commissioners the opportunity to nominate their own candidates;
- Further notify the commission of finalists for any position; and,
- Allow commissioners to interview those contenders, according to a copy of the memo provided by the foundation.
The final decision regarding appointments and reappointments still remains with the foundation.
