State auditors to keep GASB board seat after losing chair
State auditors and treasurers will have the consolation of continuing to maintain a presence on the seven-member Governmental Accounting Standards Board even though its chairman will no longer represent their sector after June 30.
The Financial Accounting Foundation said Thursday a position currently held by a college professor will be filled by a former state auditor or someone with similar experience beginning July 1.
FAF stirred controversy among public sector finance groups earlier this month when it indicated the next GASB chairman will break with tradition and not have government service as part of his background.
Government Finance Officers Association CEO and Executive Director Chris Morrill said Monday that GFOA was “pleased” by the latest development.
Morrill noted that having the voice of state auditors on the GASB board is “critical because it is state authority to determine their own and their local government accounting. So we wanted that voice to be heard.”
David Vaudt, GASB’s current chairman, said Monday he doesn’t know why FAF decided to break from that past practice.
“I wasn’t a part of those conversations,” Vaudt said while attending a GFOA conference in Washington. “I think the trustees went through the process and so their decisions are their decisions to make.”
GFOA joined with the National Association of State Treasurers (NAST) and National Association of State Auditors, Comptrollers and Treasurers (NASACT) earlier this month in issuing a statement that the absence of a state auditor or treasurer “fundamentally compromises the diversity of GASB.”
FAF attempted to address that criticism when it announced Thursday it has opened a search for “an individual with a strong background as a state auditor or similar government role” to serve as a successor to college professor Michael H. Granhoff, whose second five-year term ends June 30.
“Former state auditors have served continuously on GASB since its inception in 1984, and they provide a vital perspective to the GASB as the board works to improve public sector accounting standards,” the announcement said.
The part-time position will require “about one-third the time commitment of a full-time position,” the foundation said. The deadline for applications is Feb. 24.
The GASB chairman-elect, Joel Black, is the partner in charge of the audit practice at the Atlanta accounting firm Mauldin & Jenkins where he oversees the audit practice of the firm’s eight offices in five states. Black also leads the firm’s government professional practice group covering more than 400 public sector clients.
The chairman is the only full-time member of the GASB board. Vaudt received $691,083 in total compensation in 2018, according to the Financial Accounting Foundation’s IRS Form 990.
Although all states follow GASB’s GAAP standards, most states don’t adhere to them on all county and local levels. State auditors set the accounting standards for local governments in many states.
The selection of Black may have been influenced by the longstanding criticism some states have received for underfunding their public employee pension systems.
Some critics have blamed GASB’s rules rather than the state officials who are responsible for the pension plan underfunding.
FAF’s 15-member board may have heeded that advice, but the public sector associations say they were not consulted in advance about that change in policy.
“I think there’s some discussion that needs to happen between all the government associations and FAF,” said Michele Mark Levine, director of GFOA’s technical services center. “The fact they were iced out of the chairmanship without any discussion or consultation is of concern to our association and others. There have been some unofficial discussions but I don’t believe a true discussion of how things might move forward has happened yet.”
The outgoing GASB chairman served as Iowa’s elected state auditor for 10 years and earlier served on the Iowa Accountancy Examining Board from 1995 through 2002.
Vaudt also worked in the private sector for 25 years in the Des Moines, Iowa, office of KPMG LLP, including 13 years as an audit partner.