When Robert H. Herz takes the reins of the Financial Accounting Standards Board on July 1, he hopes to usher in an era in which rules can be adopted faster, take on a more principles-based approach and accommodate converging international accounting standards. "Once I get a lay of the land, and get some consensus on issues and operating procedures, I'd like to see if we can put together a good game plan for the standards-setting process," he says.
The job won't be easy. FASB has long been regarded as an organization hobbled by the minutiae of its accounting standards and criticized for placating the demands of the powerful accounting industry too often. Over the last year, many–including influential members of Congress–have questioned the need for the seven-member, non-governmental board after it failed to foresee the use of the types of special-purpose entities (SPEs) that caused the financial implosion of Enron Corp. and as global capital markets move inexorably toward a unified set of accounting standards, monitored by the International Accounting Standards Board.
For his part, the 48-year-old Herz, a senior partner at PricewaterhouseCoopers until he officially begins his five-year term next month, says he isn't worried about FASB falling into the background once global convergence picks up steam. "It's imperative that the FASB be a strong participant in that process of creating common standards across the world's major capital markets," he says. "But we won't get to that point if the standards setter for the world's largest capital market is not a player in that."
Recommended For You
He also takes issue with criticism that FASB is in the pocket of the industry it sets rules for. The problem, he contends, is not with the board–whose members must sever all ties to the accounting industry–but rather that some marketplace participants, particularly investors, have opted not to be vocal in the debate to shape U.S. accounting policy. "It is true that the corporate community and accounting firms have been more active in providing input," he says. "I would like to hear more voices, particularly from the users. They are critical for writing standards."
Herz says that calls for more oversight of FASB itself don't faze him, either–so long as politicians don't use the regulatory power to sway the development of standards. "What I would mind is tampering with the oversight process," he says. "We do our best to come to answers that are neutral and are not influenced by short-term political influences. I am adamant that any mechanism that does get set up has to preserve our ability to write standards as we feel."
Outgoing Chairman Edmund L. Jenkins agrees: "It would be a mistake to short cut our open due process," he says."It will be important to hear from constituents."
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
