FAF proposed changes spur former FASB member comments.

• Author: Heffes, Ellen M.
• Position: Financial reporting - Financial Accounting Foundation - Financial Accounting Standards Board

Last December, the Financial Accounting Foundation (FAF) Board of Trustees released for public comment (by February 10) proposed changes to oversight, structure and operations of FAF, the Financial Accounting Standards Board (FASB) and Governmental Accounting Standards Board (GASB). FAF oversees the funding and appointment of members of both FASB and GASB.

The document resulted from a Special Committee on Governance Review that met last July to reexamine its overall structure, effectiveness and efficiency and to plan for its future. Much of the self-examination was sparked by recent moves by many countries to use International Financial Reporting Standards (IFRS), which, the FAF document says, have "opened a broad-ranging debate on issues related to accounting standards convergence and globalization."

It continues: "At its core, this debate must include a realistic assessment of how IFRS will work in actual application across the world and what contributions can be made by FAF and FASB to the quality and consistency of those standards. The outcome of this debate will affect the future role, structure and influence of FAF and FASB on the global standard-setting process. However, regardless of the outcome, FASB will likely continue to have a meaningful role in how international standards are set, and it may have continuing responsibility for setting standards for private enterprises and not-for-profit organizations in the U.S."

Overall, FAF's 11 recommendations are "designed to better position FAF and the standard-setting boards to become even more effective and efficient in a changing environment."

Checking FASB's website prior to press time and comment deadline, 14 letters were posted (by February 4). Notable were those received by former two-term FASB Chairman Dennis R. Beresford (1987-97) and two former board members. Beresford is currently an accounting professor at the University of Georgia and chairs audit committee for three large public companies.

Generally, Beresford supports efforts for improvement and "strongly" supports strengthening and enhancing the governance and oversight activities of the trustees, calling it "by far, the most important proposal." He urges reestablishment of an ongoing Oversight Committee (which was established during his tenure, then discontinued). "To the best of my knowledge," he writes, "FASB has not conducted retrospective evaluations of its standards for at least 25 years ... something that should be...