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This study examines foundation oversight authority as a distinct tool used to manage stakeholder conflict, promote legitimacy, and maintain the autonomy of standard-setting boards. Prior literature traditionally focuses on the standard-setting boards and technical arguments surrounding proposed accounting standards. We examine whether the Financial Accounting Foundation (FAF), through exercise of its oversight role, can oblige the standard-setting boards to increase stakeholder engagement as a tool to legitimize contentious activity. The presented case is a qualitative analysis of the FAF’s GASB Scope of Authority project, a rare public exercise of FAF oversight authority, in which the FAF applied its authority despite stakeholder disagreement on the line between oversight and standard setting. We conclude that the standard-setting foundation’s role has evolved to primarily provide process, as opposed to content, oversight. This focus allows the FAF to navigate the blurred boundary between oversight of standard-setting due process and influence over the content of issued financial accounting standards while safeguarding the boards’ autonomy and delegated authority. These conclusions provide insights to future research and practice as many stakeholders claim the Scope of Authority policy sets a broad precedent. Implications and precedence for international standard-setting bodies and environmental, social, and governance reporting are discussed.
Amanda Convery, University of Delaware
Matthew Kaufman, Portland State University
Terry D. Warfield, University of Wisconsin–Madison