It may be a little early, but it’s hardly a surprise. Edward W. Trott officially gave notice Thursday that he will be retiring from the Financial Accounting Standards Board in June 2007.

Trott had told FASB he might reassess his ability to serve when he accepted his second five-year stint in 2004. Now, he told CFO.com, he’s planning to take sailing lessons with his wife and then settle down to teach accounting to undergraduates.

Former FASB chair Dennis Beresford, now a professor at the University of Georgia, says the biggest surprise of Trott’s tenure at FASB was his support of fair-value accounting — hardly the direction the former KPMG partner was expected to head. Trott himself agrees, noting that serving on FASB often has the effect of broadening board members’ perspectives.

Trott says FASB’s mission of improving accounting standards for the “guidance and education of the public” — including issuers, auditors, and users — drove him to “work passionately and focus on the financial statement as a communication vehicle rather than just representing the audit profession.”

“I’d agree with Dennis: I’d say my hesitancy about fair value from an auditor perspective became outweighed by my desire to have financial statements communicate as much information as possible,” he says. “I think I learned that there’s a better way.”

Coming from a career in auditing, Trott says he was “very hesitant” about fair-value reporting — “but as my focus became much more looking at financial reporting as communication rather than just debits and credits, I really concluded that fair value seemed more and more the best way to capture economic phenomena in the financial statement.”

To that end, Trott hopes his swan song will be the board’s pending issuance of a fair-value measurement document “that will solidify a single definition of fair value and provide a general framework for making fair-value measurements. Hopefully, as people really work with the fair-value measurement, even the person charged with auditing will see it’s much more appropriate than what we do today.”

In fact, if he could do one more thing before stepping down, says Trott, it would be to get rid of FAS 5, the statement that currently defines recognition and measurement. “That’s a standard that was written before the conceptual framework,” he says. FAS 5 requires that companies be able to measure potential liabilities with some degree of accuracy before they recognize them in their financial statements. That, he says, “drives this thinking that because of the uncertainty, I just won’t report this in the financial statement until the number I put down will be the ultimate outcome.” The problem, he says, is that when companies take that approach, it “takes away information that needs to be in the financial statements.”

Who will likely replace Trott on the board? Beresford notes that FASB has traditionally mixed members of different backgrounds according to a set formula: three from public accounting, two from Corporate America, one from academia, and one financial analyst. Last month derivatives-accounting and risk-management expert Thomas Linsmeier, chairman of the accounting department at the Eli Broad College of Business at Michigan State University, joined the board. He replaced Katherine Schipper, who joined FASB from the faculty of Duke University’s Fuqua School of Business.

Trott’s replacement likely will be someone 50 or older with a substantial public accounting background and previous involvement with FASB or experience commenting on its drafts. In other words, says Beresford, someone who “is close to FASB, involved with the Emerging Issues Task Force or Advisory Council, and who holds a senior technical position in a major accounting firm,” as Trott did.

The current interest in principles-based accounting might shake things up just a bit, so “it’s possible that instead of a technical expert they might be interested in someone who’s been out in the field or from a smaller firm, to get a different perspective.” And because Trott turned out to be “an activist type,” says Beresford, it’s possible FASB will be looking for a more middle-of-the-road personality.

It’s unlikely that a CFO of a public company would be considered — though many years ago the board included only one corporate member, until the community lobbied for more representation. Still, “I think some would believe that a third person from the business community would start to be too many,” says Beresford. “After all, they’re the people most affected by FASB announcements.”

Trott’s advice to his replacement? “Be willing to have your views change as you learn.”