FASB Voting Requirements

The trustees of the Financial Accounting Foundation (FAF) recently voted to increase the minimum number of votes needed for the Financial Accounting Standards Board (FASB) to adopt a statement or issue an exposure draft from 4 votes (a simple majority) to 5 votes (a super majority). It is questionable whether these efforts to slow down or influence are in the long-run best interests of those affected by the standard-setting process - the preparers, auditors, and users of financial information. Although some feel that the requirement for a super majority will not unduly lengthen the standard-setting process, finding a 5th vote will involve time and, most often, more compromise. The negotiation required to attain a 5th vote will not necessarily make a standard of higher quality, and it will require additional time and probably make the process more complicated.