Missing from the FAF's memo, says Minter, is the presumption that FASB and FAF members who perform well can be reappointed without being vetted again by the SEC. Minter says the SEC would not allow the FAF to include such a provision. "There is no difference now between appointments and reappointments," says Minter. This past December, FASB chairman Herz was reappointed, as were FAF Trustees Timothy P. Flynn, chairman and chief executive of KPMG LLP, and James H. Quigley, chief executive officer of Deloitte & Touche USA LLP.

In its new agreement, the SEC "goes a great deal further [than before] in its involvement in the selection process," argues board member Edward Trott, who is set to retire from FASB this year. In the past, the SEC "suggested" candidates, he says, but it never sought to formalize its power to nominate or interview. He says that while the SEC has always had statutory authority to set accounting standards, the regulator looked to the private sector to provide an "independent" perspective on accounting issues. Trott worries that the new formal process will open the door to more political tinkering with standard setting, either directly from the SEC or indirectly from Congress.

This story includes additional reporting by Sarah Johnson and David Katz.

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