The Colgate Scene
November 2006

Standard bearer
Leslie French Seidman helps set the rules for the accounting profession

[Photo by Timothy D. Sofranko]

Accountants might not have the reputation for being the most scintillating cocktail party guests, but Leslie French Seidman '84 can pull in a crowd two or three deep. Sure, she had lots of practice networking and talking up alumni as a student ambassador and member of the Swinging 'Gates a cappella group. But these days it's more than her conversational skills that are grabbing people's attention -- it's her work as a member of the Financial Accounting Standards Board (FASB), the independent commission charged with creating and reviewing U.S. standards for financial reporting.

In the corporate world, FASB's decisions carry the weight and consequence of a Supreme Court opinion. One change in accounting rules can mean the difference between a company showing millions of dollars in profit, or none at all -- such as when the board decided in December 2004 that companies must include stock options to employees on their balance sheets. And the recent accounting scandals involving Enron, WorldCom, and Tyco probably give the board's actions greater meaning to both financial insiders and the lay public than ever before.

"They had a very negative effect on public perception and confidence," Seidman said of those high-profile fraud cases. "There definitely has been increased awareness of the importance of financial reporting and more support for good accounting standards."

An early summit
Reaching the pinnacle of the accounting profession would seem to be somewhat of a non sequitur for a liberal arts graduate who majored in English literature. She jokes that it would have made more sense for her husband, Eric Seidman '84, to be where she is today, considering that he majored in economics and holds an MBA from the University of Pennsylvania's Wharton School.

"Twenty years ago we never could have predicted that I would end up in accounting and he in marketing," she said. "I always tested well in math, but it wasn't ever anything that I was excited about."

Seidman didn't have the luxury of pursuing a career based solely on her personal interests. Having a mother who died young and growing up in a large blended family, she had to put herself through college, which she did with the help of a scholarship from Colgate. And so as graduation approached, getting a good job and repaying student loans were squarely on her mind. She was recruited by Arthur Young & Co. for a program that allowed her to work and simultaneously earn an MS in accounting from New York University.

Once finished with her degree, Seidman audited companies for Arthur Young before moving to J.P. Morgan to work on policy issues. Only in her mid-20s, Seidman began breaking new ground. At the time, there were few national accounting standards for financial instruments such as derivatives, the value of which is based on other securities including stocks, bonds, or futures; or for securitizations, which are backed by hundreds or thousands of loans that are pooled together. She was given the job of developing company guidelines for reporting those types of investments, which required someone with exceptional analytical abilities and writing skills -- not just a number cruncher.

"I was working for somebody who really trusted me and gave me a lot of exposure at a young age," she explained.

At about the same time, FASB was beginning to consider some of the issues she already had researched. In the late 1990s, Seidman was named a FASB Industry Fellow, and she remained on staff there for several years after her fellowship ended. During that time she had a daughter, Madeline (who is now 11), and decided to start her own business as a financial reporting consultant. Joining the actual standards board hadn't even occurred to her until she got a call from a colleague in 2003 mentioning that one of the seven members had just stepped down. He encouraged her to apply for the job.

"I thought it was a long shot," she said. "The board members from industry all have been at the comptroller level or higher. I was afraid others wouldn't think I had the credentials, but I went for it anyway."

In fact, her experience -- nontraditional as it was -- made her particularly well suited for the board, which is based in Norwalk, Conn. She was selected to finish the remaining three years of the open term, and was reappointed in 2006 to serve another five years.

The view from the top
Joining the board meant that Seidman had to sever all business ties, since FASB members must be independent in both fact and appearance. "They're at the top of their profession, and they're squeaky clean," explained Bruce Knecht '80, a Wall Street Journal reporter who has covered FASB and accounting issues. "They have to be peerless in reputation because of the work they're doing."

FASB meetings are conducted in public, much like a town council -- although Knecht said that "there are long stretches where the average person who thinks of themselves as being reasonably intelligent would be lost." Besides having to understand the nebulous nature of many financial instruments, board members need to synthesize enormous amounts of information. The stock compensation issue alone required more than 200 public meetings and drew more than 12,000 comment letters. Seidman said that the ability to consider alternate points of view, take a position, and communicate about it effectively are essential to her work.

"All of that I learned at Colgate. None of that has to do with a master's degree in accounting."

In general, Seidman tends to focus on the practical effects that new accounting and financial reporting rules will have.

"I try to think of these issues as an investor in a company," she explained. "We're trying to make sure financial reports are based on standards that are not biased and that are comparable so investors can make decisions about where to put their money."

Of course, reasonable people could come to different conclusions about what is unbiased and comparable, and so Seidman's work continues to draw intense interest at business and social gatherings.

Her husband recalls one evening when they had dinner with two couples whose daughters were in school with Madeline. One of the other two gentlemen at the table worked at a hedge fund, and when he learned he would be meeting a FASB member, he sent an e-mail to his colleagues asking them if they had any questions for Seidman. He proceeded to show up at the restaurant with a stack of more than a dozen responses in hand.

"We sat down, and he just started asking Leslie questions," Eric Seidman recalled. "At some point, his wife finally said, `Honey, put those away.'" The heavy press coverage of the Enron debacle made people much more interested in how a company's accounting decisions relate to their personal investments, and it hasn't let up since. "We were going to cocktail parties and people were lining up around her," he said. "People who never would ask her what she did all of a sudden were fascinated by her career."

Seidman can serve for up to 10 years total; her current term expires in 2011. When it's time to move on, she said she'll probably return to her consulting business. For now, though, she's enjoying the chance to make a real difference in her profession. Of working for FASB, she said, "You don't do it for the glory. You don't do it because it makes you popular. You do it because you believe in the mission."

DiFulco, who is based in Cranford, N.J., has written for the New York Times, Washington Post, Working Mother, and many other publications.
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