Standard Setting Process in Trouble (Again)

After 17 years, the Financial Accounting Standards Board (FASB) is beset by critics on all sides. The problems facing the standard-setting process are not the result of inadequate talents on the FASB; there are probably a number of complex explanations for the FASB's current state. The problem could be endemic in a voluntary, self-regulatory standard-setting system. Rather than accepting that pessimistic conclusion, it may be more productive to analyze 2 correctable problems: 1. It seems that the FASB has lost sight of the fundamental nature of its job - that of leading the financial community in establishing the standards that all would find useful in reporting financial results. 2. It appears that the countervailing forces, which in the past have preserved a certain balance, have shifted. The FASB must demonstrate its commitment to the development of applicable standards, and it must demonstrate its ability to lead the community toward better standards.