The Financial Accounting Foundation (FAF) is responsible for funding the activities of both the FASB (Financial Accounting Standards Board) and its counterpart for state and local government, the Governmental Accounting Standards Board. FAF is also responsible for selecting the members of both Boards and their respective Advisory Councils.

FAF Updates

FAF Board of Trustees Approve Changes to Oversight, Structure and Operation of FAF, Financial and Governmental Accounting Standards Boards
On February 26, 2008, the FAF’s Board of Trustees announced that it has voted to approve major changes to the oversight, structure and operations of the FAF and the Financial and Governmental Accounting Standards Boards (FASB and GASB). The changes emanate from the recommendations of the FAF Trustees’ Special Committee on Governance Review. Established in July 2007, the Committee was created to examine the structure, effectiveness, and efficiency of the governance processes of the FAF, FASB and GASB.

The Committee’s recommendations were made available for public review from December 2007 – February 2008. Paul Sharman, President and CEO of IMA, submitted a letter to the FAF that reflected his views on the committee’s recommendations. A copy of the letter can be found below under Related Documents. A summary of the changes for the FAF, FASB and GASB can be found in a news release that is posted on the FASB’s website at www.fasb.org.

Robert Herz Reappointed as FASB Chairman
The Financial Accounting Foundation (FAF) made an announcement on January 23, 2007 that Robert H. Herz has been reappointed to a second five-year term as chairman on the Financial Accounting Standards Board (FASB). His term begins on July 1, 2007. In 2002, the initial year of his first appointment as FASB chairman, Mr. Herz presided over the historic Norwalk Agreement between the FASB and the International Accounting Standards Board (IASB) under which the two Boards agreed to work together to develop a common set of high-quality international accounting standards that will better serve the global capital markets. Since that time, the Boards have made significant progress, and in April 2005 they agreed that all major projects would be conducted jointly. A news release about Mr. Herz’s appointment can be found on the FASB’s website at www.fasb.org.

Paul Sharman’s Speech at FAF Trustees Dinner
On August 21, 2006 Paul Sharman was invited to address FAF Trustees at its quarterly meeting regarding the issues that face the profession. Of particular note, Mr. Sharman raised awareness of the need to “bring balance,” as it applies to the profession, and the education of future accountants and the makeup of the regulatory bodies. A copy of the speech can be found below under related documents.

FAF Taxonomy Advisory Council
The FAF Taxonomy Advisory Council was created in July 2006 to ensure that “tagging” of financial disclosures are accurate as it relates to use of interactive data mechanisms such as eXtensive business reporting language (XBRL). Members of the advisory council are from professional service organizations such as IMA, Financial Executives International (FEI) and the American Institute of Certified Public Accountants (AICPA) along with representatives from public accounting firms and others from the financial community that has a strong background in financial reporting and information technology.

The FAF Taxonomy Advisory Council is anticipating work towards a taxonomy development project to support SEC Chairman Christopher Cox’s vision for companies to fully adopt interactive data mechanisms such as XBRL. If approved by FAF trustees, the taxonomy project will begin immediately with a completion date of June 30, 2007.

Neal Hannon, FAF Director of Financial Reporting Technologies and project manager for the taxonomy development project, has made preliminary inquiries to members of the Taxonomy Advisory Council to identify financial and information technology professionals within their organizations to volunteer their time to participate as subject matter experts towards the project. Participation as a subject matter expert can be at different levels. One level could involve a person(s) being available by phone a few days a month to answer inquiries about the appropriate tagging of financial disclosures. Based on the nature of the inquiries, some research may be involved related to specific industries. Another option for participation is to the extent that people are available to spend most of the time needed for research during a 6-7 month period at FAF’s headquarters in the Norwalk, Ct. area. People interested in participation at the core team level would have to engage in mandatory training sessions that would take place at FAF’s headquarters during November 15-17, 2006 in Norwalk, Ct.

IMA is encouraging members from its Financial Reporting Committee to volunteer some times towards the project as subject matter experts since the appropriate expertise exists among members.

Related Documents

Paul Sharman’s letter about FAF proposed governance changes for FAF, FASB, & GASB.

Paul Sharman's speech at FAF Trustees Dinner - 8-21-06.