FAF makes it easier to complain about FASB, GASB

The Financial Accounting Foundation, which oversees the Financial Accounting Standards Board and the Governmental Accounting Standards Board, is adding a place on its website where people can raise concerns about the standard-setters not following due process.

The new due process correspondence form enables people to raise concerns whenever they think a violation of due process established for authoritative standard-setting has occurred at either FASB or GASB. The new due process correspondence procedure comes after an SEC Investor Advisory Committee recommended changes last September in how FASB operates to make it more responsive to the needs of investors (see story).

Courtesy of GASB

The new complaint facility will allow stakeholders to flag alleged failures by either board to follow their due process procedures as outlined in the FAF bylaws for the FAF's Oversight Committee.

The FAF noted that 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 bylaws that have allegedly been violated. The correspondence can be anonymous, but that means it won't be possible for the committee members to send follow-up questions.

If the allegations raise meaningful due process issues, the Oversight Committee will investigate further. If the committee finds that the respective board didn't appropriately follow their due process, the trustees will determine what remedial action is necessary.

"We believe adding this new procedure is a natural next step in strengthening the oversight process," said FAF trustee Timothy Ryan, who is co-chair of the Oversight Committee (as well as U.S. chair of Big Four firm PwC), in a statement Wednesday.

The new correspondence form should only be used to address concerns about due process. It's not meant to be a vehicle for stakeholders who are concerned about the outcome or progress of a particular standard-setting project, the FAF cautioned. Any such concerns should be addressed directly to FASB or GASB through their normal stakeholder outreach channels.

"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," said FAF trustee David Lillard, co-chair of the Oversight Committee, in a statement. "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."

In the FAF Strategic Plan last year, one of the objectives was 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."  

The announcement Wednesday is the second major initiative by the FAF trustees in the past few months to fulfill that goal. Earlier this year, they 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.