Financial Accounting Foundation Trustees Enhance Stakeholder Feedback Procedures and Transparency for Standard-Setting Boards
Norwalk, CT, April 26, 2023—As part of its continuing efforts to improve its oversight activities and to further increase transparency for stakeholders, the Board of Trustees of the Financial Accounting Foundation (FAF) today announced an enhancement that will make it easier for stakeholders to raise potential concerns about compliance with the due process procedures of the Financial Accounting Standards Board (FASB) and the Governmental Accounting Standards Board (GASB).
This enhancement, available to the public via the FAF website, enables stakeholders to flag for the FAF’s Oversight Committee alleged failures of either the FASB or the GASB to follow their due process procedures as outlined in the FAF By-Laws.
Stakeholder correspondence with the Oversight Committee will require reasonable specificity regarding an alleged failure by either Board to follow due process on an authoritative standard setting project. Ideally, it will cite the specific provisions of the By-Laws that have allegedly been violated. Correspondence can be anonymous, but it will not be possible for Committee members to direct any follow-up questions to anonymous authors.
If the allegations raise meaningful due process issues, the Oversight Committee will investigate further. If the Committee determines the FASB or the GASB did not appropriately follow their due process, the Trustees will determine what remedial action is necessary based on the circumstances.
“We believe adding this new procedure is a natural next step in strengthening the oversight process,” said FAF Trustee Timothy Ryan, co-chair of the Oversight Committee.
“Soliciting stakeholder perspectives has always been a vital part of our governance model, just as it is to FASB’s and GASB’s standard-setting processes,” added FAF Trustee David Lillard, co-chair of the Oversight Committee. “We want stakeholders to know they can communicate directly with the Oversight Committee if they have important concerns to share about how faithfully FASB and GASB members are following their due process.”
Stakeholders can find the new correspondence form on the FAF website. This form should be used to address concerns about due process only. This form is not a vehicle for stakeholders who are concerned about the outcome or progress of a particular standard-setting project. Any such concerns should be addressed directly to the FASB or GASB through their normal stakeholder outreach channels.
In the FAF Strategic Plan published in 2022, one objective is to “continually review and assess our governance and oversight practices to ensure they align with our mission and vision, reflect best practices, and maintain the confidence of stakeholders in our role to oversee the independent standard-setting process.” Today’s announcement is the second major initiative that the FAF Trustees have introduced in recent months consistent with this objective. Earlier this year, the Trustees announced they will begin to livestream portions of future Oversight Committee meetings. The first livestream will take place on Tuesday, May 9, 2023, and will appear on the FAF website.
About the Financial Accounting Foundation
Established in 1972, the Financial Accounting Foundation (FAF) is an independent, private-sector, not-for-profit organization based in Norwalk, Connecticut. Its Board of Trustees is responsible for the oversight, administration, financing, and appointment of the Financial Accounting Standards Board (FASB) and the Governmental Accounting Standards Board (GASB).
The FASB and GASB (collectively, “the Boards”) establish and improve financial accounting and reporting standards—known as Generally Accepted Accounting Principles, or GAAP—for public and private companies, not-for-profit organizations, and state and local governments in the United States. Both Boards set high-quality standards through a process that is robust, comprehensive, and inclusive. The FASB is responsible for standards for public and private companies and not-for-profit organizations, whereas the GASB is responsible for standards for state and local governments.
The Foundation’s Board of Trustees comprises 14–18 members from varied backgrounds—users, preparers, and auditors of financial reports; state and local government officials; academics; and regulators. The Trustees direct the effective, efficient, and appropriate stewardship of the FASB and GASB in carrying out their complementary missions, select and appoint FASB and GASB members and their advisory councils, oversee the Boards’ activities and due process, and promote and protect the independence of the Boards. For more information, visit www.accountingfoundation.org.