WASHINGTON - The board of the Financial Accounting Foundation announced yesterday that it approved changes to the oversight, structure, and operations of the two standard-setting bodies it oversees, the Governmental Accounting Standards Board, which sets standards state and local governments, and the Financial Accounting Standards Board, which establishes accounting standards for corporations and nonprofit organizations.

Though the changes are billed as a way to boost the independence of the standards-setting process, the FAF's announcement omitted any mention of a controversial proposal that would void a carefully negotiated 1984 agreement allowing two governmental groups - the Government Finance Officers Association and the National Association of State Auditors, Comptrollers and Treasurers - to elect three members to the FAF board.

FAF chairman Robert E. Denham said that the foundation is still negotiating with the governmental groups, which had warned they would consider seeking a new accounting standards-setter for states and localities if the FAF approved the proposal unilaterally.

"We think those discussions are important," Denham said, speaking to reporters at the conclusion of the FAF board meeting. "We're approaching them in good faith believing we'll achieve a solution to some of the issues we have."

A spokesman said the FAF hopes to conclude the negotiations before its next board meeting in May.

The proposal to change the way governmental groups nominate the FAF board members comes after the GFOA in March called for the FAF to put GASB out of business and transfer governmental accounting standards setting to the FASB. GFOA has argued that GASB is repeatedly overstepping its bounds, though FAF officials disagree.

When the FAF unveiled its proposal last year, it sought to restrict governmental group only to nominating board members while expanding the number of groups involved in the nomination process. Under the proposal, only the board could elect nominees.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.