Will a smaller FASB smooth the road to convergence?
Interesting developments on the regulatory front recently.
You may have heard about the decision to downsize the Financial Accounting Standards Board from seven members to five. But have you read the back story to that decision?
According to CFO.com's Marie Leone, the Financial Accounting Foundation's decision to shrink FASB was made despite widespread opposition to such a move. Ultimately, writes Leone in "FASB Parent: Five Is More than Seven," the FAF disregarded opposing comments and placed greater weight on the approaching global convergence of financial reporting standards.
"Timothy Flynn, chairman and chief executive of KPMG and a FAF trustee, said that to bring in new members during the convergence process 'might slow the process down,' " Leone writes. "The terms of two current FASB members, George Batavick and Donald Young, expire this year. Some commenters urged the trustees 'to wait until we had a clear path and timetable for convergence,' said Denham. 'That suggests that we should be passive. We believe we should be an active participant and work to create the path.' "
It seems to me that making a move that's in direct contrast to a majority of opinions on an issue is either (a) a sign of true courage, conviction and foward-thinking leadership, or (b) a misguided act of hubris. Which one is this?