The SEC held up approval of FASB's budget for four-and-a-half months until the accounting standards-setter agreed to give the regulator more say over the appointment of FASB members.
Speaking at a conference two years ago, Robert Herz, chairman of the Financial Accounting Standards Board, lavishly praised the comments — and personal appearance — of the preceding speaker, Scott Taub, then the Securities and Exchange Commission's deputy chief accountant. To laughter from the audience, Herz then explained the reason for his obsequiousness: since Sarbanes-Oxley, it is the SEC's Office of the Chief Accountant that approves the FASB budget.
Two years later, the SEC's power to approve its budget is no longer a joking matter for FASB. This year, the Office of the Chief Accountant, now run by Conrad Hewitt, refused to sign off on FASB's budget until its parent organization, the Financial Accounting Foundation, agreed to SEC demands for more say in the appointment of both FASB members and FAF trustees.
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