Last week, this AICPA Conference speech from SEC Deputy Chief Accountant Julie Erhardt was posted (the Conference was held a few weeks ago); it does a nice job summarizing the comments received on the SEC’s concept release regarding the use of IFRS by US issuers. In addition, these AICPA speeches from Associate Chief Accountants were posted:
– Joel Levine’s speech on XBRL
– Steven Jacob’s speech on MD&A; and 404 internal control implementation issues
– Stephanie Hunsaker’s speech on consents and experts; consolidation method to the equity method for an investment; and MD&A disclosures in the current credit environment
– Todd Hardiman’s speech on large errors and materiality
“I spent Monday through Wednesday attending the largest conference devoted to current events affecting financial reporting, featuring plenty of the SEC’s staff – the ones who interact with the auditors examining the year end financials. And I’m wondering: when did the SEC become afraid of its own shadow? There seemed to be an overwhelming aura surrounding the SEC presenters, a kind of self-consciousness that they be careful to not “write GAAP” in the delivery of their speeches to the audience.
When this conference first began thirty-five years ago, the intent was to bring the SEC’s thinkers and doers in front of a large audience of auditors, to discuss the problems they’d seen in filings with the audience. The intent was not to “speechify GAAP” – but to get the message out as to the problems they’d seen and describe how they handled it. The goal: to identify troublesome practice issues and tamp them down before they became pervasive by presenting them to the auditors who could do something about it. That’s a worthwhile service to everyone involved in the financial reporting chain, from preparers down to users and the auditors in between.
That’s not writing GAAP – that’s being an effective regulator. (And don’t forget that writing GAAP is something that the SEC is empowered to do.) Preventing problems through effective communication has always been at the heart of this conference. And this effective communication worked quite well long before the advent of Blackberries and the internet – accounting firms responsible for keeping their SEC knowledge current seemed to get the message quite well by the state-of-the-art information distribution means, like overnight delivery and fax machines.
Now that there’s virtually instant transmission of data, including the publication of all the speeches on the SEC’s website at no charge to readers, critics are complaining about the dissemination of the comments in the speeches as being unfair. Absurd.
The comments of the SEC commentators were full of reminders of current GAAP, but missed the pithiness of years past when they described fact patterns that showed how a standard was misinterpreted or misapplied, and how they expected it to be remedied if encountered in practice by members of the audience. Instead, many of the commentators offered comprehensive reminders of where trouble might occur in the application of new accounting standards, rather than reporting on the known snafus they’d seen. Instead of warning registrants and auditors about problems they’d seen, it’slike they’re wish-listing problems they hope don’t happen. While there’s value in that approach, there might be a lot more value in what they’d done in the past. Shouldn’t regulators act like regulators, instead of acting like their walking on eggshells?”
SEC Delays Direct Registration Deadline Until March 31st
Recently, I blogged about some quirks in the new direct registration program. In this adopting release issued last week – which approves the Exchanges’ rule changes on an accelerated basis – the SEC extended the deadline for listed securities to be eligible for inclusion in the direct registration framework from January 1st to March 31st.
The SEC’s release states “. . . .there has been some confusion regarding the steps the listed companies need to complete to become compliant with these requirements. As a result, certain listed companies are still in the process of completing the necessary steps, which could include modifying their by-laws or having their boards take other actions, to become DRS eligible. In addition, in some cases, even though a listed company has completed all actions required to be taken by the company to become compliant, the company’s transfer agent is still completing the process necessary for the transfer agent to facilitate the company’s DRS eligibility.
In order to assure that listed companies have adequate opportunity to comply with the listing standards that require listed securities to be eligible for inclusion in a direct registration program, each of the Exchanges is proposing to extend the effective date for its DRS eligibility requirement until March 31, 2008.”
Section 16 Year-End Compliance Checklist
On Section16.net, Alan Dye has posted his annual “year-end checklist” for Section 16 compliance purposes (including a Word version of the checklist, which is accessible via a link on right corner of this page).
Don’t forget to catch Alan in this annual webcast: “Alan Dye: Keeping Yourself Out of the Section 16 ‘Hot Water’” on January 28th. As all memberships are on a calendar-year basis, you will need to renew before then to listen to the webcast.
– Broc Romanek