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Proposal Would Streamline Accounting Standards Development Process
Washington, DC, March 25, 2002 - The Financial Accounting Foundation (FAF), the body that oversees the Financial Accounting Standards Board (FASB), recently issued a request for comment on a series of proposed changes intended to streamline the accounting standards development process. In light of recent events, the FAF determined that there is a need for the FASB to be more flexible in responding to change and to increase the efficiency of its standard- setting process.
The proposed changes relate to the size and composition of the FASB, the voting requirements to issue new standards, and the length of comment periods for proposed new standards. Comments on the proposed changes are due by April 17, 2002.
In particular, the FAF has proposed:
- a reduction in the size of the FASB from seven to five members. Traditionally the FASB has consisted of three members from public accounting, two members from issuers, and one member each from the investment and academic communities. The request for comment indicates that the FAF is considering the best mix of representatives from these communities.
- eliminating the super-majority voting requirement necessary to issue a new standard. If the FASB is reduced to five members, the voting requirement to issue a new standard would be reduced to a 3-2 simple majority.
- shorter comment periods. The comment period on proposed standards would be reduced to a maximum of 60 days.