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.
“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”.
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.