The departure of US and international
standard-setting chiefs provides the profession with an opportunity
to take a fresh look at problems plaguing the convergence of US and
global accounting standards, an accounting network leader has
said.
US Financial Accounting Standards Board (FASB)
chairman Robert Hertz revealed this month that he will step down on
1 October from the post he has held for the past eight years. His
retirement comes two years before the completion of his second
term.
International Accounting Standards Board
(IASB) chairman David Tweedie will step down when his term ends
next June.
The departure of both figureheads comes at a
crucial time in a convergence project that is aiming to create a
single set of global accounting rules by combining IFRS and US
GAAP. A raft of contentious standards are currently under
development.
BDO International chief executive Jeremy
Newman told The Accountant the change of leadership can be
viewed in two ways.
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By GlobalData“The convergence effort will be a more
challenging task because Herz and Tweedie have been working
together for some years and they know where they are at,” Newman
said.
“In other ways, it’s actually a great
opportunity because there are certain aspects of the convergence
agenda that have sort of got stuck and certain political aspects to
it where two fresh pairs of eyes may be an advantage.
“Also, because neither Herz nor Tweedie were
appointed to their positions knowing that this is what the agenda
was going to be, the two [new] people will be appointed
specifically with an agenda to achieve the creation of one single
set of high quality global accounting standards.”
Newman said it is important there is a
thorough selection process to find the next FASB and IASB leaders
to ensure they “get along, complement each other and further the
convergence process rather than having to start all over again with
two new personalities”.
Personal toll
No reason has been given as to why Herz has
decided to retire, but some leaders are unsurprised by the
decision.
Grant Thornton International chief executive
and Financial Accounting Foundation (FAF) trustee Ed Nusbaum said
the nature of the FASB chairmanship and the period of controversy
during the financial crisis has probably taken a personal toll on
Herz.
“I am not surprised he would want to retire
after such a long period in the role,” Nusbaum said.
The pressure is on to find the right person to
fill Herz’s shoes because the 2011 date for a decision by the US
Securities and Exchange Commission (SEC) on whether to adopt IFRS
is looming. The SEC decision depends on the completion of major
convergence projects between IFRS and US GAAP, so the new FASB
chairman must ensure the convergence process is delayed as little
as possible.
Herz will be replaced in the interim by FASB
member Leslie Seidman. Seidman has been a FASB member since July
2003 and previously served the FASB in various staff roles. She
began her career as an auditor at an Ernst & Young predecessor
firm and, prior to joining the FASB, managed her own firm.
