The FASB is set to select two new board members by year-end, according to remarks of Chuck Noski, Chairman of the Financial Accounting Foundation’s Board of Trustees. Speaking at the FAF’s August 23 meeting, he said, “The appointment process is underway, and we will finalize those selections later this year.” FAF Spokesperson Christine Klimek confirmed the appointments are anticipated to be announced, “in the coming months.”
The two new appointees will fill key vacancies arising from the retirement of board member Daryl Buck, who plans to retire at the end of this year, and Larry Smith, who will retire from the board on July 1, 2017.
Buck has served as the FASB board’s primary point person on private company matters, including as liaison to the Private Company Council (PCC), and Smith, who served in key leadership roles on FASB’s staff prior to joining the board, is currently the board’s point person working with the Transition Resource Group formed on FASB’s new rule on credit losses/impairment of financial instruments.
Buck’s key role with Private Company Council
Buck’s appointment to the FASB in 2011 was hailed by the private company community, given his strong background as CFO of a private company in addition to audit experience with Arthur Andersen, and experience serving on precursor advisory groups to the PCC.
As liaison to FASB’s Private Company Council (PCC), Buck played a critical role in ensuring a close working relationship with the PCC, empowering the advisory group and staff that supported it, while maintaining the PCC’s -and the board’s – independence.
The PCC’s productivity has exceeded that of predecessor advisory groups, by successfully recommending – and FASB approving – numerous new standards affording more cost-effective and useful alternative accounting treatments for private companies. Certain recommendations, including simplification of goodwill impairment testing, have not only been applied to private companies, but proposed by the FASB for public companies as well.
Given this success, Buck’s shoes – leading the way in walking the talk in private company accounting at the FASB – may appear to be hard to fill.
Golden seeks to reassure private companies
In remarks at the AICPA’s National Advanced Accounting and Auditing Technical Symposium (known as the ‘NAAATS conference’) in July, FASB Chair Russ Golden praised Buck’s contribution to FASB, and sought to reassure stakeholders of the board’s continued commitment to private companies.
“Prior to Daryl’s arrival in 2011, and before the creation of the PCC, the FASB approached our work with the inherent view that our stakeholders—public companies, private companies, and not-for-profits—are the same,” said Golden.“Daryl and the PCC contributed to our collective understanding of when accounting should be the same for private companies, and when it should be different.
“Let me say right here that Daryl’s departure from the Board will not diminish our commitment to serving private company stakeholders,” emphasized Golden
As explained on FASB’s website, the FAF seeks to create a board with diverse views. There does not appear to be a requirement that the person chosen to fill the vacancy created by Buck’s impending departure will necessarily have to be a preparer of financial statements.
Golden told the NAAATS conference, “While I can’t name names yet, I can say that the slate of candidates is extremely strong, and includes individuals who are highly-experienced in private company matters.”
Smith a longstanding key player on FASB board, staff
The successor to board member Larry Smith, will also have big shoes to fill. Smith’s institutional knowledge of FASB’s standard-setting process, including constituents’ views and the relationship with other key players such as the SEC, AICPA, PCAOB and IASB, is immense.
Prior to becoming a board member in 2002, Smith was the lead technical director on FASB’s staff, and Chaired FASB’s Emerging Issues Task Force (EITF). He was appointed Director of the FASB’s Transition Resource Group (TRG) on Credit Losses, for the new Credit Losses standard, (aka the “CECL” standard, for the Current Expected Credit Losses model replacing the longstanding ‘incurred loss” model).
Modelled after FASB’s Revenue Recognition TRG, the Credit Losses TRG has held one public meeting so far this year. In an interview with Bloomberg BNA’s Denise Lugo earlier this year, Golden indicated that stakeholders would need some period of time to become sufficiently familiar with the new standard to articulate issues for the TRG; the standard was issued in June.
Three new board members in total
Together with Christine Ann Botosan, formerly of the University of Utah, the soon-to-be-announced successors to Buck and Smith will bring the total number of ‘new’ board members to three, out of the seven-member FASB board.
It will be interesting to see how the board tackles new and continuing agenda matters as it undergoes close to a 50% turnover in the seven-member board in the 2016-17 year. Continuing board members include Chair Russell Golden, whose term ends in 2017 but is eligible for a 3-year extension, Vice Chair Jim Kroeker, who formerly served as Chief Accountant at the SEC, and the two ‘investor representative’ board members, Marc Siegel and Hal Schroeder.
Asked at the August FAF meeting if she had any advice for easing the transition for new board members, Botosan, who joined the board on July 1 (filling the vacancy upon Tom Linsemeier’s retirement), said, “I still feel like I am running in front of a slow moving tidal wave,” but noted she was grateful for early assistance from FAF and the FASB, and to her previous employer for providing flexibility to spend time on conference calls and other tasks to get up to speed. The only other thing that would have helped, she said, would have been to have ‘feet on the ground’ before her start date, to help build relationships. Overall, she said, “I am absolutely thrilled to be a part of the board, very committed to the mission, and very happy to be part of an organization where everyone is committed and passionate about that mission. “
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