By Martha Graybow
NEW YORK (Reuters) - The chairman of the Financial Accounting Standards Board, which sets U.S. accounting rules, said on Tuesday he is retiring after more than eight years at the helm.
The accounting body's board will also increase to seven members from five, reversing a 2008 decision to downsize the board that critics had contended eroded the group's effectiveness.
Robert Herz has served as FASB chairman since 2002, when the accounting industry was reeling from the Enron Corp fraud scandal. Leslie Seidman, a FASB member since July 2003, will take over from Herz as acting chairman effective October 1.
The changes were announced by the Financial Accounting Foundation, which oversees the Norwalk, Connecticut-based FASB and selects members of its board.
The move to increase FASB's board size is expected to occur by early next year. The group had operated with seven board members since its inception in 1973, but the board was downsized in 2008 in what the foundation's trustees said at the time was an effort to improve the board's efficiency amid plans to converge U.S. and international accounting standards.
The foundation's Tuesday announcement said the reversal would be the best way to help promote accounting convergence.
"Returning the board to the seven-member structure will enhance the FASB`s investment in the convergence agenda with the International Accounting Standards Board (IASB), while addressing the unprecedented challenges facing the American capital markets in the months and years ahead," said FAF Chairman Jack Brennan.
U.S. Securities and Exchange Commission Chairman Mary Schapiro, in a statement, said that she commended the decision to increase the board's size.
Herz was reappointed to a second term in as FASB chairman in 2007. Previously, he had been a senior partner at PricewaterhouseCoopers.
Seidman, before joining the FASB board, had managed her own firm, providing consulting services to companies and accounting firms, and previously was vice president of accounting policy at J.P. Morgan & Co.
(Reporting by Martha Graybow; Editing by Phil Berlowitz and Matthew Lewis)
