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FASB chairman steps down

FASB chairman steps down

Colin Barr 2010年08月26日
The nation's accounting standards-setter has lost its leader.

????The Financial Accounting Standards Board said Tuesday that its chairman, Robert Herz, will step down next month. The FASB, the private sector group whose rules dictate how corporate America keeps its books, didn't say where Herz (right) is going, though it said board member Leslie Seidman will take his place on an acting basis.

????Herz's tenure was marked by the FASB's heavily criticized, politically charged reversal of a rule it adopted a few years ago to give investors better insight into the health of banks.

????That episode, which gravely damaged the FASB's reputation for independence, started when the accounting board adopted a rule expanding the use of fair value or mark-to-market accounting.

????In adopting the rule, FASB aimed to give investors more information about the health of banks and brokerage firms by prompting them to value certain assets and liabilities at their market price, rather than at the price the firm paid for them.

????But the decision turned into a nightmare for the accountants, in part because of bad timing.

????The rule's adoption coincided with the peak of the credit bubble, and as asset prices tumbled bankers complained that mark-to-market accounting was forcing them into a death spiral of falling valuations and forced asset sales.

????There is little evidence that the accounting rules were doing any such thing, but that didn't quiet the din in Washington. As stock prices tumbled to lows last seen more than a decade ago, Congress pressured the FASB to loosen the rules or face its legislative wrath.

????Herz & Co. quickly moved to ease off on the rules. Critics promptly charged that the FASB, which was formed to make sure that accounting guidelines were set by impartial observers who would be resistant to pressure from the government or industry, had caved in at the worst possible time.

????"April 2, 2009 is a day of accounting infamy," Penn State accounting professor Ed Ketz wrote in response to the FASB cave-in. "It is a day in which the Financial Accounting Standards Board (FASB) bowed to the pressures of the banking community and Congress to allow distortions, massagings, and manipulations of the U.S. financial reports."

????Since then, the FASB has been trying to manage the integration of U.S. and global accounting standards, a process that hasn't gone completely smoothly.

????But Herz said on Tuesday that "I'm very proud of our accomplishments, and I'm confident the board will continue to successfully meet the challenges ahead."

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