DUE PROCESS CORRESPONDENCE PROCEDURE
The charter of the Standard-Setting Process Oversight Committee (Committee) of the Financial Accounting Foundation (FAF), states that the Committee shall “consider and evaluate the adequacy, comprehensiveness, effectiveness and adherence to due process procedures through all stages of the standards-setting process” of the Financial Accounting Standards Board (FASB) and Governmental Accounting Standards Board (GASB). This document describes the procedure the Committee has adopted with respect to correspondence alleging a failure to follow authoritative standard-setting due process, specifically, – for the FASB, the due process related to Accounting Standards Updates; and, for the GASB, the due process related to Statements of Governmental Accounting Standards.
- All parties are encouraged to raise concerns as soon as they perceive that a violation of due process established for authoritative standard-setting has occurred.
- The details of due process for authoritative standard-setting are detailed in the Financial Accounting Foundation By-Laws1 (FAF By-Laws) as follows:
- FAF By-Laws:
- Chapter A, Article II – Financial Accounting Standards Board - Section 5. FASB Standards of Financial Accounting and Reporting; Voting; Quorum
- Chapter A, Article II – Financial Accounting Standards Board - Section 8. Identification of Votes; Dissents
- Chapter A, Article II – Financial Accounting Standards Board - Section 11. Meetings Generally.
- FAF By-Laws:
- FAF By-Laws:
- Chapter A, Article IV – Governmental Accounting Standards Board - Section 5. GASB Standards of Financial Accounting and Reporting; Voting; Quorum
- Chapter A, Article IV – Governmental Accounting Standards Board - Section 6. Statements of Governmental Accounting Standards
- Chapter A, Article IV – Governmental Accounting Standards Board - Section 9. Identification of Votes; Dissents
- Chapter A, Article IV – Governmental Accounting Standards Board - Section 12. Meetings Generally.
- FAF By-Laws:
- The Committee will maintain a “Contact the FAF Standard-Setting Process Oversight Committee” webpage as a subcategory for the Committee’s listing on the FAF website.
- The webpage will explain that the Committee meets quarterly and that correspondence related to allegations of authoritative standard-setting due process violations will be reviewed, as soon as practicable, by the Committee at a quarterly meeting.
- Correspondence addressed to the Committee under this policy must be based upon an alleged failure or failures to follow due process as it relates to authoritative standard-setting and may be submitted via a webform or by contacting the Committee or the FAF’s Vice President, Board Operations & Governance. The webform will require reasonable specificity regarding the alleged failure or failures to follow due process as it relates to authoritative standard-setting and what specific provisions of the Financial Accounting Foundation By-Laws have been alleged to have been violated. Anonymous correspondence will be accepted. However, the instructions for the webform will caution that the submission of anonymous correspondence will prevent the Committee from asking follow-up questions. Correspondence submitted by contacting the Committee or the FAF’s Vice President, Board Operations & Governance, will be summarized in writing for the Committee and, if requested by the submitter of that correspondence, the correspondence will be treated as anonymous.
- The general protocol for dealing with correspondence subject to this policy will be as follows:
- As an initial step, the Committee will determine in private session how to proceed after reviewing the correspondence.
- The Committee may ask FASB Technical Director or GASB Director of Research and Technical Activities to provide an analysis to the Committee during a public or private session held by the Committee. The FASB/GASB Chair or Vice Chair also will be present at that session.
- In one or more private sessions that follow, the Committee will determine whether a violation of due process for authoritative standard-setting has occurred.
- If the Committee concludes such a violation has occurred, remedial action will be determined as follows:
- If the violation relates to a final accounting standard or final amendment to a standard, the applicable standard or amendment will remain in place pending remedial action, or resolution of any disagreement of the type described in point iii below.
- If the violation relates to a stage of the standard-setting process before a final accounting standard or final amendment to a standard has been issued, the Committee (exercising the oversight authority of the FAF Board of Trustees referenced below delegated to the Committee pursuant to its charter) will discuss appropriate remedial action, if any, with the FASB/GASB. Absent disagreement of the type described in point iii below, the final standard or final amendment will not be issued until the remedial action has been completed.
- If there is a disagreement between the Committee and the FASB/GASB (by majority vote of the FASB/GASB) as to (1) whether a failure to follow due process has occurred or (2) the appropriate remedial action, the matter will be referred to the Board of Trustees, which will decide what action is necessary consistent with the Board of Trustees’ authority “to provide oversight, on an ongoing basis, over the activities of the FASB, the GASB and their due process practices, policies and procedures” as provided in Chapter A, Article 1, Section 2 of the FAF’s By-Laws.
- The Board of Trustees “shall not direct the FASB or the GASB to undertake or to omit to undertake any particular project or activity or otherwise affect the exercise by the FASB or the GASB of their respective authorities, functions, and powers in the establishment and improvement of financial accounting and reporting standards, and the Board of Trustees shall take care not to impair, in fact or perception, the independence and objectivity of the FASB or the GASB” as provided in Chapter A, Article 1, Section 2 of the FAF’s By-Laws. The Committee is subject to the same limitations.
- Correspondence that results in findings of a violation and/or remedial action, including the name and business address of each party who submitted correspondence under this policy if it is not anonymous, and the Committee’s response, if any, will be published on the Committee’s webpage.
[Adopted by the FAF Board of Trustees on April 18, 2023]