The Financial Accounting Foundation’s board of trustees has approvedmajor changes to the oversight, structure, and operations of the FAF and itstwo standard-setting boards, the Financial Accounting Standards Board (FASB)and the Governmental Accounting Standards Board (GASB).
Yesterday’s changes emanate from the recommendations of theFAF trustees’ special committee on governance review, which was establishedlast July to examine the structure, effectiveness, and efficiency of thegovernance processes of the FAF, FASB and GASB.
Changes to the FAF include, among others: the expansion of thenumber and breadth of investors, accounting, business, financial, andgovernment organizations and entities invited to nominate FAF trustees with theunderstanding that the final authority for all appointments rests solely withthe discretion of the board of trustees. Moreover, the foundation voted tochange the current term of trustees from one three-year term with a possiblesecond three-year term to one five-year term.
It has also been voted on to reduce the size of the FASBfrom seven to five members effective July 1, as well as to retain the FASBsimple majority voting requirement. And it has been approved to secure a stableand permanent funding source for the GASB, the size, term length andcomposition of which will also be retained.
FAF trustees, all of whom are independent leaders withdiverse backgrounds, are responsible for the oversight, administration, andfinances of both the FASB and its counterpart of state and local government,GASB.