On September 30, Robert Herz stepped down as chairman of the Financial Accounting Standards Board, leaving board member Leslie Seidman as acting chairman. Neither FASB nor Herz would comment on why he retired after more than eight years in the job, but it probably wasn’t due to any lack of popularity. Nearly all of those who worked with the 57-year-old Herz commend his blend of intellect and calm. Herz has done a “terrific job,” says Dennis Beresford, accounting professor at the University of Georgia’s J.M. Tull School of Business and a former FASB chairman himself. “He’s dealt with tough issues and tough board members — not all of them are easy to work with — and he’s been able to get the board to resolve some very difficult issues.”
“I don’t think there was ever a raised voice when Bob spoke,” says Mark Ellis, CFO of luxury goods retailer Michael C. Fina and a six-year veteran of the FASB small business advisory committee. “He truly had the intellect to understand both sides of an argument and explain the reasoning behind decisions made that both sides would understand and appreciate.”
In an exclusive interview with CFO, conducted via e-mail, Herz reflected back on his tenure at FASB and speculated about his future. The following is an edited version of the interview.
As you look back over your years at FASB, what do you think is your legacy?
I can point to the scores of pronouncements we issued, but I’m also very proud of many other things we did over the last eight years to improve accounting standard-setting. Those included rationalizing the standard-setting structure in our country so that most pronouncements now come out from the FASB versus the four-legged stool of the FASB, AICPA, EITF, and SEC before. I’m also very proud of the codification effort, which has [created] a much better organized and more accessible set of U.S. GAAP literature.
We also significantly broadened our outreach to various constituencies through new advisory groups with investors and with small business and private companies. We strengthened our staff . . . and we stepped up our involvement with the accounting academic community by reinstituting an accounting academic fellowship program and through our Financial Accounting Standards Research Initiative.
We also did things to make the process more transparent and open, including making our standards available on the Web free of charge and audiocasting our meetings for free on the Web. Finally, and very importantly, there has been the whole international convergence effort.
Which accounting pronouncement made the greatest single improvement to the accounting literature during your tenure?
It’s hard to single out any particular one. [One] example of what I think was [a] good and interesting pronouncement [is] Statement 157. Before that standard there were many different definitions and approaches to fair value measurements. What that standard did was to provide a common definition of fair value, how to approach it in different circumstances, and standardized disclosures around fair value measurements included in the financial statements.