The American Institute of Certified Public Accountants (AICPA)
has questioned the timing of changes to the governance structure of
the US Financial Accounting Standards Board (FASB), calling the
move premature.

The US Financial Accounting Foundation (FAF) board of trustees
approved a series of significant changes to the oversight,
structure and operations of the FAF, FASB and the Government
Accounting Standards Boards (GASB) in February. This follows a 2007
governance review to examine the structure, effectiveness and
efficiency of the governance processes of the three

The reduction in the size of the FASB board from seven members to
five was one of the key changes to emerge. Chairman of FAF board of
trustees Robert Denham said the size of the standard-setter’s board
was changed because the trustees felt a five-person board could
operate more effectively, be more cohesive and move more quickly on
the task of convergence.

The changes come at a time when US accounting organisations are
looking at the impact of converging US GAAP with IFRS to create one
set of global accounting standards. AICPA’s senior vice-president
for member competency and development, Arleen Thomas, said the
institute regarded the current size and composition of the FASB
board to be appropriate given the work load and the diverse
experiences required. “I do wonder how a board of a smaller size
will work and… we felt that the proposal was premature. Having the
seven members that we have today does allow them to outreach to
their constituencies, which is a very powerful part of the work… to
understand how their standards are being applied,” she said.

Thomas said the AICPA would have preferred to review a blueprint
for convergence with IFRS before changes were made to the
governance structure. “We recognise the power of the global market
and the importance of one set of accounting standards in those
global markets,” she said. “We would like to continue to see the US
Securities and Exchange Commission and the FAF continue to explore
and bring clarity to the vision to bring us to international

However, Denham argues that the changes will speed up the
convergence process. “Our reading of the environment is that there
is, and there should be, some significant time pressure for moving
to convergence. We could have sat back and said ‘OK, we are not
going to change anything until there is a clear agreement on a
path’, but our attitude is that we did not like accepting such a
passive role on something that is as important as this is,” he

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Ellyn Brown, an FAF trustee who chaired the special committee on
governance that proposed the changes, said a smaller board and a
fresh approach to managing staff and resources could increase the
number of perspectives being offered to the board.

Another important change to the FASB structure is allowing the
chairman the power to set project plans, agenda and priority of
projects, following the appropriate consultation. Agendas of the
FASB were previously set by a majority vote. 

FAF-approved changes


• Board size of trustees from 16 members to a flexible 14 to
18 members
• Trustees’ term length from three-year terms to single
five-year term
• Expand number and breadth of entities invited to nominate
FAF trustees
• Increase trustees’ governance activities


• Reduce board size from seven members to five, effective July
• By-law now requires board members to possess investment
• FASB chair can now set FASB project agenda following


• GASB chair can now set GASB project agenda following

Source: Financial Accounting Foundation