TheCorporateCounsel.net

Let me start by noting that I committed an error yesterday. Sorry about that. I’m just glad it rarely happens – my first apology in 11 years of blogging! In yesterday’s blog, I didn’t correctly characterize what Zillow’s plans are for its upcoming earnings call – they are merely accepting questions by Twitter. They aren’t tweeting answers during the Q&A portion of the meeting. I corrected that blog yesterday afternoon. Note that Zillow’s IR web page identifies three social media channels that may be used “complying with its disclosure obligations under Regulation FD.”

Perhaps I can be forgiven due to the Wild West nature of what is happening (see my similar quote in today’s NY Times). It’s hard to keep track of who is doing what and where. And as Dominic Jones of IR Web Report tweeted, maybe that’s a good thing as companies experiment with what investors want.

A bad thing – thankfully unrelated to lawyering – is the unreliable nature of how tweets are displayed. As we will be discussing during our upcoming webcast, just because something is tweeted – that doesn’t mean it will show up as such due to mysterious screening – as best illustrated by this display from Dominic Jones entitled “Magically Disappearing Tweets!”…

CII Strengthens Policy on Auditor Independence

At its recent spring conference, the Council for Institutional Investors revised its policy on auditors, including calling on boards to consider several factors when deciding whether to retain the same auditor – and that boards retaining an auditor beyond 10 years should be required to explain why doing so is in the best interests of shareholders. The policy clearly sets forth who the customer of the audit is – and it also calls for audit committees to be more transparent in their audit committee reports.

Europe Closer to Mandatory Auditor Rotation

Here’s news from this Accountancy Age article:

European Parliament’s Legal Affairs Committee today voted to reform the way audits are conducted imposing mandatory rotation. Under reforms drafted by British MEP Sajjad Karim, companies will be obliged to change their auditor every 14 years – although this may be extended to 25 years by member states if they fulfill certain criteria.

MEPs voted to adopt a series of measures designed to improve the audit process and instil greater transparency and confidence in the way audits are conducted. Speaking after the vote in the European Parliament Legal Affairs Committee (Juri), Karim said: “Reforming the audit sector is crucial to boost confidence in the financial markets, and to support growth and investment in European companies. “We have consistently advocated an international approach, adopting global standards which promote audit quality. It is no surprise that regulators in the US and around the world are watching us closely and the vote this morning signals loud and clear that we are taking the right steps.”

Karim’s original proposal proposed a long back-stop period, of 25 years, in contrast to the European Commission’s plan to intervene in the market on a six year basis.
The report was voted through Juri with the support of MEPs from the European People’s Party and Alliance of Liberals and Democrats for Europe. The reforms will go before the full European Parliament later this year.

And here is an article from the Journal of Accountancy…

– Broc Romanek