Financial Accounting Foundation …

                          Financial Accounting Foundation
                                 Board of Trustees

                            Corporate Governance
                      Changes to Oversight, Structure, and
                      Operations of the FAF, FASB, and GASB
      _______________________________________________________________


                       Recitals and Resolutions Adopted by the
                         FAF Board of Trustees on 02-26-08
      _______________________________________________________________
WHEREAS: in July 2007, the Board of Trustees (the "Board") of the Financial
Accounting Foundation (the "FAF") established a Special Committee on Governance
Review (the "Special Committee") to reexamine the overall structure, effectiveness, and
efficiency of the governance processes of the FAF, the Financial Accounting Standards
Board ("FASB"), and the Governmental Accounting Standards Board ("GASB"); to
evaluate and plan for the future role of the FAF and FASB in a capital market
environment moving toward a single set of global financial reporting standards; to
evaluate and plan for the future funding and continuing role of GASB; and to evaluate
and plan for the ongoing and future role of the Board in preserving the independence and
promoting the effectiveness of private sector and governmental accounting standard
setting;
WHEREAS: the Special Committee reported its activities to the Board in August 2007
and discussed its continuing work and preliminary recommendations to the Board at
subsequent 2007 Board meetings, and, at a special meeting of the Board on December 14,
2007, the Board voted to expose for public comment a series of recommendations, while
reserving formal action on the recommendations until the recommendations were
published for public comment and could be further studied, debated and considered;
WHEREAS: during the public comment period commencing December 18, 2007 and
ending February 10, 2008, the FAF received 59 letters from users, preparers, auditors,
government associations and officials and individuals providing input on the
recommendations;

WHEREAS: the Board has considered and debated the recommendations of the Special
Committee; the statements and recommendations contained in the comment letters; the
recommendations applicable to the FAF, FASB and GASB provided to the United States
Securities and Exchange Commission (the "SEC") by the Advisory Committee on
Improvements to Financial Reporting ("CIFiR") as set forth in CIFiR's February 14,
2008 Progress Report, and the views of representative organizations of state and local
governments that have met with the FAF in respect to the recommendations; and

WHEREAS: the Board believes it is in the best interest of the FAF, FASB, GASB, and
the continuation of the independent standard-setting process, that the FAF make changes



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to the oversight, structure and operations of the FAF, FASB and GASB designed to
improve effectiveness and efficiency with respect to:

   the enhancement of independent standard setting for both private sector and
       governmental accounting; and
   the support of consistent and transparent high-quality global accounting standards.

NOW, THEREFORE, BE IT:

RESOLVED: that each of the recommendations set forth below is approved in concept,
subject to implementation steps to be taken by management and final approval by this
Board, except that the recommendations regarding the size of the Financial Accounting
Standards Board ("FASB"), the voting requirements for the FASB, and the authority of
the FASB Chairman and the GASB Chairman, respectively, to determine the project
plans and agenda of their respective Boards, are hereby approved in final form as set
forth in separate resolutions below:

Summary of Recommendation

1. The FAF Board will increase its governance activities, including its level of
   formal review, analysis and oversight of the data and materials regularly provided
   by FASB, FASAC, GASB and GASAC. In addition, FAF will:
   Continue to exercise comprehensive oversight of FASB and GASB business
      practices and processes;
   Continue to perform review and oversight of budget and actual financial results
      and advocate for the FASB and GASB to ensure adequate resources and
      funding to achieve their respective work plans; and
   Assume a more active role in the oversight of FASB and GASB standard setting
      processes. While FAF will not insert itself into standard setters' substantive
      deliberations or standards promulgation, it will provide and perform more
      active oversight as to the efficiency and effectiveness of certain important
      elements of standard setting such as due process, agenda setting, solicitation of
      public comment, consideration of comments, and the post-implementation
      evaluation of the effectiveness and efficiency of standards. Toward these
      ends, the FAF will:
      Formalize an evaluation process by which it provides observations and
          recommendations to the GASB and FASB, and engages in dialogue with
          the boards about such observations and recommendations; and
      Formalize a post-implementation standards review process by which GASB
          and FASB address issues raised by constituents and others and report to
          the FAF on the disposition of those issues.

2. FAF Trustees will devote additional time to policy and strategy relating to
   independent standard setting.


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Summary of Recommendation

3. FAF's executive and Board leadership structure will be changed to encompass a
   1/3-to-1/2-time chief executive officer and chairman of the board, and a full-time
   president and chief operating officer. The Chief Executive Officer and Chairman
   will have principal responsibility for the development of strategy and the external
   functions of FAF leadership (e.g., advocacy, public policy articulation, and
   communication with outside constituencies). The President and Chief Operating
   Officer will focus on organizational administration and management of the FAF,
   and will assist the Chairman with strategic and external responsibilities.

4. The current means of nominating and electing the FAF Trustees shall be changed
   to:
      ·   Expand the number and breadth of investor, accounting, business, financial,
          and governmental organizations and entities invited to nominate individuals
          to the Board;
      ·   Affirm the fiduciary obligation of FAF Trustees to select, interview, and
          evaluate all nominees for appointment to the Board, the singular caveat
          being that a minimum of three (3) Board positions will be designated as
          government trustee positions; and
      ·   Discuss in good faith with the governmental nominating organizations the
          modification of their existing nomination and election procedures so as to
          effectuate the intent of the foregoing.
   The precise manner of implementing the foregoing shall be addressed at the
   Board's May 2008 meeting.
5. The terms of FAF Trustees, which currently provide for one three-year term with
   a possible second three-year term, shall be changed to a single five-year term.

6. The size of the Board, which currently is a fixed number of 16, shall be changed
   to a flexible range of 14-18 Trustees, which number shall be fixed by Board
   resolution from time to time.

7. FASB Board size and qualifications shall be changed as follows:

   Effective July 1, 2008, the FASB Board will be reduced from seven (7) to five (5)
       members, retaining a majority vote (3-to-2) for FASB Board action. (See
       implementing resolution below)
   The current statement of FASB member qualifications, which, as set forth in the
      current FAF bylaws, includes knowledge of accounting, finance and business,
      and a concern for public interest in matters of financial accounting and
      reporting, shall be amended to also include knowledge of and experience in
      investing and accounting education and research, and appreciation of the
      needs of participants in the capital markets. (See implementing resolution
      below)


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Summary of Recommendation



8. Consistent with the Trustees' enhanced leadership and oversight of the standard
   setting process, the FASB's agenda-setting process shall become a "leadership
   agenda" process whereby the FASB Chair shall be vested with the authority,
   following appropriate consultation, to set the FASB's project plans, agenda, and
   project priorities.

9. The Trustees affirm their conviction that securing a stable and permanent funding
   source for the GASB is a matter of urgency and that the FAF's course of action as
   to GASB funding must be determined in the near future.

10. Consistent with the Trustees' enhanced leadership and oversight of the standard
    setting process, the GASB's agenda-setting process shall become a "leadership
    agenda" process whereby the GASB Chair shall be vested with the authority,
    following appropriate consultation, to set the GASB's project plans, agenda, and
    project priorities.




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Amendments to Chapter A, Article II-A of the FAF By-Laws
(deletions being indicated by strikethrough and additions by underline)


RESOLVED: that Section 1 of Chapter A, Article II-A of the By-Laws is hereby
amended to read in its entirety as follows:
      Section 1. Financial Accounting Standards Board. The Trustees shall appoint a
      board, which shall be known as the Financial Accounting Standards Board (FASB),
      whose members shall be appointed without regard to previous employment or
      discipline and shall have the qualifications provided in Section 2 of this Article.
      The FASB shall have and exercise all authority and power, and perform all
      functions, of the Foundation and the Board of Trustees in respect of standards of
      financial accounting and reporting, including the conduct of all activities related
      thereto, to the extent and as provided in Article SixthFifth of the Restated
      Certificate of Incorporation and in conformity with the Structural Agreement.

RESOLVED: that, effective July 1, 2008, Section 2 of Chapter A, Article II-A of the By-
Laws is hereby amended to read in its entirety as follows:
        Section 2. Number and Qualifications of Members. The number of members that
        shall constitute a full Financial Accounting Standards Board shall be seven five.
        TheEach Members of the FASB shall, in the judgment of the Trustees, have
        knowledge of and experience in investing, accounting, finance, and business,
        accounting education and research and a concern for the investor and the public
        interest in matters of investing, financial accounting and reporting. Members of
        the FASB shall receive compensation as determined by the Trustees, and shall
        serve full time.


RESOLVED: that, effective July 1, 2008, Section 5 of Chapter A, Article II-A of the By-
Laws is hereby amended to read in its entirety as follows:
      Section 5. Statements and Interpretations of the FASB; Voting; Quorum. The
      FASB is hereby authorized to issue Statements of Financial Accounting Standards
      and Interpretations of Statements of Financial Accounting Standards, as hereinafter
      described in this Article. The Rules of Procedure prescribed by the FASB shall set
      forth and provide for procedures with respect to the issuing of such Statements and
      Interpretations. The FASB's Statements and Interpretations shall relate to
      accounting for and presenting financial information.

      Effective April 23, 2002, the The FASB shall not issue any Statement of Financial
      Accounting Standards or Interpretation of a Statement, or any Exposure Draft of
      any such Statement or Interpretation, without the approval of at least a majority of
      its membersexcept in the case of vacancy, disability of any duration or character
      preventing any member from voting, or in the event that any member, at any time
      prior to the vote, disqualifies himself or herself from voting for reasons related to a
      policy of the Trustees adopted pursuant to Section 4 of this Article, in any of which

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     events the approval of not less than a majority (but in no event less than three) of
     the remaining members of the FASB shall be sufficient. A member may vote even
     if such member was not a member or otherwise was unable to or did not participate
     in any public hearings or otherwise during the research, discussion, or deliberative
     periods, and a member may continue to participate in public hearings and otherwise
     during the research, discussion, and deliberative periods even though such member
     has disqualified, or may disqualify, himself or herself on a particular vote.

     Except as otherwise expressly provided in this Section and in Section 12 of this
     Article or in the FASB's Rules of Procedure, at all meetings of the FASB a majority
     of the members serving will constitute a quorum for the transaction of business, and
     the act of a majority of the members voting shall be required to approve any action.


RESOLVED: that Sections 11 of Chapter A, Article II-A of the By-Laws is hereby
amended to read in its entirety as follows:


      Section 11. Chairman of the FASB. In furtherance of their oversight
      responsibilities as to the standard-setting process, the Trustees shall appoint, to
      serve at their pleasure, a member of the FASB as Chairman of the FASBits
      Chairman. The Chairman shall be the principal officer of the FASB and shall
      preside at its meetings. Following appropriate consultation, and subject to
      oversight of the Trustees, the Chairman shall have authority to establish and
      modify the project plan of the FASB, including an agenda of projects and their
      priorities. The Chairman shall prepare a mission statement and for submission to
      the FASB for approval. The Chairman shall prepare short- and longer-range
      operating and project plans for the FASB, including an agenda of projects and
      their priorities, for submission to the FASB for approval. The Chairman shall
      transmit the FASB's short- and-longer range operating and project plans to the
      Trustees and FASAC, shall also prepare quarterly and annual reports with respect
      to the activities of the FASB and its progress with respect to its operating and
      project plans and annual reports with the Chairman's evaluation of the FASB's
      performance within the context of its mission statement, and shall transmit such
      reports to the Trustees and FASAC and the annual reports to the nominating
      organizations, which reports shall be publicly available. The Chairman shall
      prepare the annual budget of the FASB following consultation with other
      members of the FASB and submit such budget to the Trustees for their approval.
      The Chairman shall have authority to hire, retain, and contract with staff members
      to serve the FASB in a technical capacity and to fix their duties and the amount of
      their salaries and other compensation in accordance with Foundation policies, and
      to appoint and contract with any persons or organizations with respect to research
      (following consultation with the research director) and other technical services to
      be performed by them as consultants or independent contractors. The Chairman
      also shall have authority to establish and appoint persons to task forces (who may
      but need not be members or staff of the FASB or FASAC) following consultation

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        with other members of the FASB, the Staff Directors, and FASAC, and the
        Chairman may delegate or assign particular functions or duties to other members
        of the FASB, the Staff Directors, the staff of the FASB, FASAC (following
        consultation with FASAC's Chairman), task forces, and others as the Chairman
        may determine. The Chairman shall be responsible for establishing operating
        procedures for the FASB, its staff, task forces, and other committees and groups,
        and for implementing and directing their broad operating processes. The
        Chairman shall consult with the Chairman of the GASB in order to enhance the
        effectiveness of the interrelationships between the FASB and the GASB and their
        staffs. The Chairman shall work in cooperation with the Chairman of FASAC to
        assist FASAC to accomplish its functions and to facilitate the work of the FASB.
        The Chairman shall appoint one or more Staff Directors and designate a member
        of the staff of the FASB to serve as secretary and to keep a record of its
        proceedings and may appoint other staff directors. Staff members and members
        of task forces and other persons and groups employed, hired, or otherwise
        retained or appointed by or at the direction of the Chairman shall, except as
        otherwise provided in these By-Laws, serve at the pleasure of the Chairman or as
        otherwise provided in contracts made by or at the direction of the Chairman


RESOLVED: that, effective July 1, 2008, Sections 12 of Chapter A, Article II-A of the
By-Laws is hereby amended to read in its entirety as follows:
        Section 12. Rules of Procedure. Subject to the power and authority of the
        Trustees to further amend the Restated Certificate of Incorporation and the By-
        Laws and the effects, if any, of any such amendment or amendments, the FASB
        shall have the exclusive authority to alter, amend, supplement, repeal, and adopt
        Rules of Procedure, with or without notice, hearings, or exposure, with the
        approval of a majority of its members. , except in the case of vacancy, disability,
        or disqualification as provided in Section 5 of this Article, in any of which events
        the approval of the majority (but in no event less than three) of the remaining
        members of the FASB shall be sufficient.
Amendments to Chapter A, Article IV-A of the FAF By-Laws
(deletions being indicated by strikethrough and additions by underline)


RESOLVED: that Sections 11 of Chapter A, Article IV-A of the By-Laws is hereby
amended to read in its entirety as follows:


        Section 11. Chairman of the GASB. In furtherance of their oversight
        responsibilities as to the standard setting process, the Trustees shall appoint, to
        serve at their pleasure, a member of the GASB as Chairman of the GASB its
        Chairman. The Trustees' initial appointments of the Chairman and any Vice-
        Chairmen and any replacements prior to the five-year review provided for in
        Article VI-A of these By-Laws, shall be preceded by review and approval of the


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nominees by GASAC. The Chairman shall be the principal officer of the GASB
and shall preside at its meetings. Following appropriate consultation, and subject
to oversight of the Trustees, the Chairman shall have authority to establish and
modify the project plan of the GASB, including an agenda of projects and their
priorities. The Chairman shall prepare a mission statement for submission to the
GASB for approval. The Chairman shall prepare and short- and-longer range
operating and project plans for the GASB, including agenda of projects and their
priorities, for submission to the GASB for approval. The Chairman shall transmit
the GASB's short- and longer-range operating and project plans to the Trustees
and GASAC, shall also prepare quarterly and annual reports with respect to the
activities of the GASB and its progress with respect to its operating and project
plans and annual reports with the Chairman's evaluation of the GASB's
performance within the context of its mission statement, and shall transmit such
reports to the Trustees and GASAC and the annual reports to the nominating
organizations, which reports shall be publicly available. The Chairman shall
prepare the annual budget of the GASB following consultation with other
members of the GASB and with GASAC, and shall submit such budget to the
Trustees for their approval. The Chairman shall have authority to hire, retain, and
contract with staff members to serve the GASB in a technical capacity and to fix
their duties and the amount of their salaries and other compensation in accordance
with Foundation policies, and to appoint and contract with any persons or
organizations with respect to research (following consultation with the research
director) and other technical services to be performed by them as consultants or
independent contractors. The Chairman also shall have authority to establish and
appoint persons to task forces (who may but need not be members or staff of the
GASB or GASAC) following consultation with other members of the GASB, the
research director, and GASAC, and the Chairman may delegate or assign
particular functions or duties to other members of the GASB, the research
director, the staff of the GASB, GASAC (following consultation with GASAC's
Chairman), task forces, and others as the Chairman may determine. The
Chairman shall be responsible for establishing operating procedures for the
GASB, its staff, task forces, and other committees and groups, and for
implementing and directing their broad operating processes. The Chairman shall
consult with the Chairman of the FASB in order to enhance the effectiveness of
the interrelationships between the GASB and the FASB and their staffs. The
Chairman shall work in cooperation with the Chairman of GASAC to assist
GASAC to accomplish its functions and to facilitate the work of the GASB. The
Chairman shall appoint a research director and designate a member of the staff of
the GASB to serve as secretary and to keep a record of its proceedings, and may
appoint other staff directors. Staff members and members of task forces, and
other persons and groups employed, hired, or otherwise retained or appointed by
or at the direction of the Chairman shall, except as otherwise provided in these
By-Laws, serve at the pleasure of the Chairman or as otherwise provided in
contracts made by or at the direction of the Chairman.




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General Authorizing Resolutions

RESOLVED: that management and the Special Committee on Governance Review are
hereby authorized and directed to prepare proposed amendments to FAF's Certificate of
Incorporation, By-Laws and other relevant documents to implement the above
recommendations, for future consideration and adoption by this Board; and

RESOLVED: that management and the Special Committee on Governance Review are
hereby authorized and directed to discuss changes with the governmental nominating
organizations in furtherance of the foregoing resolutions.




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