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UPDATE 1-U.S. government accounting board chairman to retire

* Accounting board chair leaving before term expires

* Board at center of debate on pension accounting

(Adds details, comments from Attmore, byline)

By Dena Aubin

NEW YORK, Oct 2 (Reuters) - The chairman of the U.S. board that sets accounting standards for state and local governments will retire next June, a year ahead of the end of his term and as controversial new standards for pensions start kicking in.

Robert Attmore, a former auditor for New York state, has headed the nonprofit Governmental Accounting Standards Board (GASB) since July 2004. His retirement was announced on Tuesday by the Financial Accounting Foundation, which oversees GASB.

Attmore, 66, said recent pressures on the Norwalk, Connecticut-based board were not a factor in his decision to leave.

"I'm a former auditor so I'm used to dealing with controversy," Attmore told Reuters.

He said he is leaving to spend more time with his family in upstate New York and does not plan to take another full-time job.

The foundation said in a statement that it will soon begin a search for a successor.

The normally low-profile GASB attracted national attention this year as it adopted a tougher stance on pension accounting. Its accounting overhaul, taking effect in 2013 and 2014, will force many state and local governments to acknowledge that their pension plans are drastically underfunded.

State and local governments are under mounting strain because of their pension funding obligations.

Critics of the standards said they would magnify liabilities on government balance sheets, while fiscal conservatives said they would give a truer picture of government finances.

CONTROVERSY OVER BOARD MAKE-UP

Attmore said he was happy with the final pension standards, and the pushback was valuable. "That's what improves the standards - having people participate in the process," he said.

Founded in 1984, GASB has a seven-member board, though the chair is the only full-time member. Many members are current or former government officials - a structure that has been criticized for lack of independence.

"The structure of the board is a problem and unless it's changed it will be a major challenge for his (Attmore's) successor," said Jeremy Gold, a New York actuary who has advised the board on pension accounting.

Attmore defended the board's makeup, saying government experience is a strength in setting standards. A majority of board members do not work in the public sector, he said.

Attmore said one of his priorities before he leaves will be finishing implementation guidelines for the pension plan standard, expected to be available in June.

Attmore's departure means standard-setters for both government and corporate accounting will come under new leadership next summer.

The Financial Accounting Standards Board, which sets standards for U.S. companies, will lose its chairman, Leslie Seidman, next June when her term expires.

(Editing by Kevin Drawbaugh, John Wallace and Leslie Adler)

Keywords: ACCOUNTING RETIREMENT/