Yesterday, the group that oversees the U.S. Financial Accounting Standards Board (FASB) voted to enact some sweeping changes to how standard setting will be accomplished in the future. As one example, effective in just four months, the FASB Board will go from seven members to five. Another troubling development is that the FASB Chair will have ultimate decision-making authority as to the agenda the Board will consider. This puts too much power in the hands of a single individual and could make it more difficult to recruit and retain other Board members.

On balance, rather than addressing these types of day-to-day operational issues, the Financial Accounting Foundation (FAF) should have worked toward addressing and potentially leading the way in the development of a national plan toward achieving the goal of a single, global set of accounting standards. That need is far more critical since the recent push toward international accounting convergence is resulting in reduced transparency and comparability for financial statement users.

RiskMetrics Group just published a report, Big Changes Afoot at U.S. Financial Accounting Standards Board but are they the right ones, to the Accounting Trends section of its Knowledge Center. To access the report, please visit here.