Effective July 1, 2008, the Financial Accounting Standards Board (FASB) will be reduced from seven to five members, according to resolutions that the Financial Accounting Foundation (FAF) adopted last week.  Reacting in part to the recent Progress Report by the SEC’s Advisory Committee on Improvements to Financial Reporting (see last week’s BVWire™), the FAF Board of Trustees also modified FASB member qualifications, which must now include “knowledge of and experience in investing and accounting education and research, and appreciation of the needs of participants in capital markets.”  Further, FAF will “assume a more active role in the oversight of FASB…standard setting processes.”

…While FAF will not insert itself into standard setters’ substantive deliberations or standards promulgation, it will provide and perform more active oversight as to the efficiency and effectiveness of certain important elements of standard setting such as due process, agenda setting solicitation of public comment, consideration of comments, and the post-implementation evaluation of the effectiveness and efficiency of standards.

To meet these goals, the FAF will formalize its evaluation procedures and post-implementation standards reviews, and FAF Trustees will devote more time to both policy and strategy related to independent standard setting.  The FASB agenda-setting process will also become a “leadership agenda” process by which “the FASB Chair shall be vested with the authority, following appropriate consultation, to set the FASB’s project plans, agenda, and project priorities.”  To read the full Recitals and Resolutions (February 27, 2008), click here.