February 7, 2008

CIFiR Posts Draft Progress Report for Upcoming Vote

The Advisory Committee on Improvements to Financial Reporting (CIFiR) has posted a Draft Progress Report in anticipation of a public meeting scheduled for Monday, February 11th. The Progress Report largely tracks CIFiR’s earlier Draft Decision Memo, with some tweaks here and there to the draft proposals – for more on those specific tweaks, check out the FEI Financial Reporting Blog.

As I mentioned in yesterday’s webcast – “The Former SEC Staff Speaks” – CIFiR is recommending an ambitious plan for rolling out XBRL, which seems largely consistent with Chairman Cox’s push to make XBRL a reality for at least some subset of issuers later this year. In the current draft proposal on the topic, the Committee recommends that once testing of the XBRL taxonomy currently out for comment is complete – and the voluntary XBRL filers have successfully used the taxonomy to submit tagged reports – a phase-in could commence with the largest 500 domestic public reporting companies “furnishing” separate tagged financial statements (presumably to be mandated as early as this Fall for calendar year-end Form 10-Ks). CIFiR’s draft recommendation further provides that one year later, the domestic large accelerated filer group would be required to furnish tagged data. Depending on the results of these efforts, the Committee would expect that, “over the long term,” the SEC should require all public reporting companies preparing GAAP financial statements to tag their filed financial statements using XBRL. Committee member Peter Wallison from the American Enterprise Institute submitted a separate statement that he believed maintaining a distinction during the phase-in of “furnished” versus “filed” tagged data was not necessary and that the implementation timetable should be left to the SEC.

One of the notable non-financial draft recommendations to be considered by the Committee on Monday is a call to update the SEC’s guidance on the use of corporate websites as a means of disclosing corporate information, including liability issues for summary information provided on a company’s website, hyperlinks from within or outside of a company’s website, treatment of non-GAAP information, and clarification about the public availability of information on a reporting company’s website.

For future consideration, the Committee is exploring the potential use of an executive summary in Exchange Act periodic reports – which is an interesting concept but in my mind potentially could add to the complexity of these already over-stuffed reports.

Posted: Electronic Form D Adopting Release

Yesterday, the SEC posted the adopting release for the rules implementing electronic filing of Form D. Unlike other recent rulemakings that were effective shortly after adoption, these rule changes have a longer lead time. Beginning September 15, 2008, issuers will have the option of filing Form D in paper or electronically – then, beginning March 16, 2009, electronic filing will become mandatory for Form D.

Yet Another SEC Office is Established

Earlier this week, the SEC announced the establishment of an Office of Collections and Distributions. Adding to the proliferation of “special purpose” Offices at the Commission, this group will be tasked with overseeing the distribution of so-called “Fair Funds” to investors. Previously, this function was carried out by the Division of Enforcement.

In a report issued last summer, the GAO criticized the SEC for its management of Fair Funds, citing, among other things, the decentralized approach for managing the Fair Funds program. At the time of the GAO report, the SEC had announced its plans to create this centralized Fair Funds office.

– Dave Lynn