FASB going forward
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Tradition has dictated that for us, August is a slow news month. With summer winding down, many in the profession are out of the o;ce enjoying a ;nal respite before Labor Day. On a personal level, my daily commute to Manhattan becomes almost tolerable
as the subway and commuter rail crowds winnow drastically.
But in a shocking departure from traditional August complacency, this year saw a pair of blockbuster
mergers, as LarsonAllen combined with LeMaster Daniels and Eisner announced that it was merging
with Amper, Politziner & Mattia.
So much for a quiet month. But it didn’t stop there: Robert Herz, who had chaired the Financial
Accounting Standards Board for eight years — inarguably through some of its most trying moments
— abruptly announced his retirement e;ective in October. While there are those, including yours truly,
who could quip that his exit announcement was, perhaps, the quickest thing that ever happened at FASB,
Herz’s decision to leave the standard-setter seems oddly timed.
While at press time no o;cial explanation was given regarding his departure, (not even the boilerplate
“I want to spend more time with my family”), it’s notable considering that just three years ago, he was
re-appointed to a second ;ve-year term as FASB chair, which would have extended to July 2012.
Herz was one of the high-pro;le proponents of convergence, and had been working with his overseas
counterpart at the International Accounting Standards Board, Sir David Tweedie, on converging U.S.
GAAP with International Financial Reporting Standards, with a June 2011 deadline of completing many
of the major obstacles in terms of projects.
Interestingly, Tweedie’s term at the helm of the IASB will sunset in June 2011, and with Herz absent
from FASB and Tweedie exiting the IASB, it doesn’t take Scotland Yard to point out that two of the main
drivers of convergence will be enjoying life elsewhere.
It’s possible that Herz saw a number of roadblocks on the path to convergence, not the least of which
was the Securities and Exchange Commission, whose chair, Mary Schapiro, gave an endorsement to the
IFRS roadmap that could best be described as lukewarm, even by those with “glass half-full” standards.
;e SEC’s recalcitrance toward IFRS could be rooted in uncertainty or reluctance to get into a political
skirmish with the IASB over authority. Should adoption of IFRS happen, it would require the IASB to
submit to oversight from the SEC, a mandate that most doubt the IASB would ever submit to.
And Tweedie’s repeated mantra that the U.S. will be excluded from the standard-setting process should
it not proceed with convergence does not seem to worry the SEC.
In this issue, our veteran assurance columnists and resident IFRS skeptics, Paul Miller and Paul
Bahnson, provide a sampling of IFRS adopters that includes such economic powerhouses as Anguilla,
Sierra Leone, St. Kitts and Tanzania.
Herz also faced mounting pressure (read: strong-arming) from lawmakers and others such as the
American Bankers Association on a number of issues, particularly fair value measurements.
But on balance, Herz successfully performed the often-contentious and thankless task of juggling a
number of opinionated and often arrogant constituencies amid a roster of polarizing issues.
Next year will be a truly de;ning one for FASB and convergence, and it might not be until then that
we can accurately gauge Herz’s legacy.
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