Delay in Accounting Changes Expected

After eight years as chairman of the Financial Accounting Standards Board (FASB), Robert Herz, is retiring October 1. This comes two years prior to the scheduled end of his term and at a time when nine exposure drafts are awaiting public comment. Among them are those on lease accounting, fair value measurements and revenue recognition – all of which will change the commercial real estate industry should they take effect. The board is also expanding to seven members from its current five meaning that three new members (Herz’ replacement and the two added board positions) will need to spend time with the drafts in order to vote on them.

Once Herz leaves, the remaining four member board will not likely put these proposals to a final-rule vote until the new members have been able to come up to speed on the issues, which will likely take months. Before Herz’ announcement, a final ruling was expected on the rules for leases by June 2011. Now, it’s anyone’s guess what will happen.

While the outcome is uncertain, I will continue to follow the actions and announcements as they are made regarding the FASB and the future of accounting rules affecting commercial real estate.

For the full CFO Magazine article please click here: Cloudy Future for GAAP