Skip to main content
MENU
Subscribe
  • Subscribe
  • Account
  • LOGIN
  • Topics
    • Alternatives
    • Consultants
    • Coronavirus
    • Courts
    • Defined Contribution
    • ESG
    • ETFs
    • Hedge Funds
    • Industry Voices
    • Investing
    • Money Management
    • Opinion
    • Partner Content
    • Pension Funds
    • Private Equity
    • Real Estate
    • Russia-Ukraine War
    • SECURE Act 2.0
    • Special Reports
    • White Papers
  • Rankings & Awards
    • 1,000 Largest Retirement Plans
    • Top-Performing Managers
    • Largest Money Managers
    • DC Money Managers
    • DC Record Keepers
    • Largest Hedge Fund Managers
    • World's Largest Retirement Funds
    • Best Places to Work in Money Management
    • Excellence & Innovation Awards
    • Eddy Awards
  • ETFs
    • Latest ETF News
    • Fund Screener
    • Education Center
    • Equities
    • Fixed Income
    • Commodities
    • Actively Managed
    • Alternatives
    • ESG Rated
  • ESG
    • Latest ESG News
    • The Institutional Investor’s Guide to ESG Investing
    • Climate Change: The Inescapable Opportunity
    • Impact Investing
    • 2022 ESG Investing Conference
    • ESG Rated ETFs
  • Defined Contribution
    • Latest DC News
    • DC Money Manager Rankings
    • DC Record Keeper Rankings
    • Innovations in DC
    • Trends in DC: Focus on Retirement Income
    • 2022 Defined Contribution East Conference
    • 2022 DC Investment Lineup Conference
  • Searches & Hires
    • Latest Searches & Hires News
    • Searches & Hires Database
    • RFPs
  • Performance Data
    • P&I Research Center
    • Earnings Tracker
    • Endowment Returns Tracker
    • Corporate Pension Contribution Tracker
    • Pension Fund Returns Tracker
    • Pension Risk Transfer Database
    • Future of Investments Research Series
    • Charts & Infographics
    • Polls
  • Careers
  • Events
    • View All Conferences
    • View All Webinars
    • 2022 Innovation Investing Conference
    • 2022 Defined Contribution East Conference
    • 2022 ESG Investing Conference
    • 2022 DC Investment Lineup Conference
    • 2022 Alternatives Investing Conference
Breadcrumb
  1. Home
  2. Online
August 01, 2008 01:00 AM

SEC panel issues recommendations for improving financial reports

Barry B. Burr
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print

    The Securities and Exchange Commission’s Advisory Committee on Improvements to Financial Reporting called for a “judicious” approach in expanding the use of fair-value accounting as part of 25 recommendations it unveiled Aug. 1 to improve the usefulness of financial information to investors and reduce the complexity of the financial reporting system.

    Chaired by Robert C. Pozen, chairman of MFS Investment Management, the committee’s recommendation on measuring value includes urging more disclosure on what part of earnings are derived from historical cost accounting and what part comes from fair value measure.

    “The committee didn’t try to resolve the debate” between historical accounting and fair-value measure, Mr. Pozen said at a webcast briefing Aug. 1 with Christopher Cox, SEC chairman, unveiling a 172-page report containing the recommendations.

    “There are people strongly in favor of having everything in fair value and people who say we have gone to far” in using fair value in accounting measures, Mr. Pozen said, noting the committee heard testimony from all sides on the issue at open meetings.

    The committee advised the SEC to recommend the Financial Accounting Standards Board “be judicious” in expanding the use of fair-value accounting.

    Hoping FASB's hands aren't tied

    The Council of Institutional Investors is “concerned that the recommendations should not tie the hands of FASB and hinder progress to fair-value accounting,” said Amy Borrus, CII deputy executive director, in an interview. In general, “preparers, companies and banks have not been supportive of fair-value accounting,” Ms. Borrus added. CII supports moving to fair-value accounting, she added.

    Jeff Mahoney, CII general counsel, testified before the committee last May.

    At the briefing, Mr. Pozen said the recommendations are consistent with what FASB is doing on fair-value accounting.

    The “recommendation is not intended to delay the revision” of pension accounting standards related to fair-value measurement, the report noted.

    Messrs. Pozen and Cox declined to set a priority among the 25 recommendations.

    The committee, chartered by the SEC in 2007, focused on recommendations addressing shortcomings in financial reporting that could be addressed within a reasonable time by the SEC, the FASB, or the Public Company Accounting Oversight Board, and without requiring legislation.

    “I don’t know if the SEC will be able to address all the recommendations (applicable to it) in this report by year end but we will start immediately” to examine them, Mr. Cox said at the briefing.

    Scrapping some restatements, focusing on interactive data

    Mr. Cox said he has instructed SEC staff to analyze the recommendations to come up with proposals to present to SEC commissioners.

    Among other recommendations, the committee called for:

    • doing away with financial restatements for any accounting error. Instead, the committee recommends financial statements should only be amended if the error would be material to investors making current investment decisions.

    • FASB to be the single standards-setter for all U.S. GAAP accounting standards, while the SEC should focus on registrant-specific guidance. The “SEC staff should refrain from issuing broadly applicable interpretive implementation guidance that would change U.S. GAAP and instead should refer such matters to the FASB,” according to the report. “If the SEC staff identifies accounting issues of relatively broad significance in the process of reviewing filings by registrants, the SEC staff should refer such issues to the FASB.”

    • the SEC to, “over the long-term, mandate the filing of interactive data-tagged financial statements after the satisfaction of certain preconditions,” such as successful testing of eXtensible Business Reporting Language, or XBRL, with U.S. GAAP taxonomy.

    • the inclusion of summaries at the beginning of annual 10-K and quarterly 10-Q financial statements that “would describe concisely the most important themes or other significant matters with which management is primarily concerned, along with a page index showing where investors could find more detailed information on particular subjects,” or, in the case of electronically available corporate financial reports, hyperlinks to details.

    • “encouraging the private sector to develop key performance indicators … that would capture important aspects of a company’s activities that may not be fully reflected in its financial statements or may be non-financial measures.”

    • increased investor representation on the FASB and the Financial Accounting Foundation, which oversees and financially supports the FASB, “to assure that financial reports will be useful to investors.”

    Other members of the 17-member committee included Scott C. Evans, executive vice president-asset management, TIAA-CREF; Jeffrey J. Diermeier, president and CEO, CFA Institute; Joseph A. Grundfest, professor of law and business at Stanford University’s Law School; and Dennis R. Beresford, professor of accounting, University of Georgia.

    Contact Barry B. Burr at [email protected]

    Recommended for You
    Good_Friday_i.jpg
    No P&I Daily on April 15
    Presidents Day illustration. Text with uncle Sam's hat and USA flag waving on blue star pattern background
    No P&I Daily on Presidents Day
    Coming_Soon_i.jpg
    P&I 1,000 coming out Feb. 14
    OCIO, Anchor in Rough Seas
    Sponsored Content: OCIO, Anchor in Rough Seas

    Reader Poll

    May 9, 2022
    SEE MORE POLLS >
    Sponsored
    White Papers
    Are Factors a Thing of the Past?
    Q2 2022 Credit Outlook: Carry On
    Leverage does not equal risk
    Is there a mid-cap gap in your DC plan?
    Out of the Shadows: The Revolution in Shadow Accounting
    The pivotal role of fixed income markets in the ESG revolution
    View More
    Sponsored Content
    Partner Content
    The Industrialization of ESG Investment
    For institutional investors, ETFs can make meeting liquidity needs easier
    Gold: the most effective commodity investment
    2021 Investment Outlook | Investing Beyond the Pandemic: A Reset for Portfolios
    Ten ways retirement plan professionals add value to plan sponsors
    Gold: an efficient hedge
    View More
    E-MAIL NEWSLETTERS

    Sign up and get the best of News delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    Subscribe Today
    May 9, 2022 page one

    Get access to the news, research and analysis of events affecting the retirement and institutional money management businesses from a worldwide network of reporters and editors.

    Subscribe
    Connect With Us
    • RSS
    • Twitter
    • Facebook
    • LinkedIn

    Our Mission

    To consistently deliver news, research and analysis to the executives who manage the flow of funds in the institutional investment market.

    About Us

    Main Office
    685 Third Avenue
    Tenth Floor
    New York, NY 10017-4036

    Chicago Office
    130 E. Randolph St.
    Suite 3200
    Chicago, IL 60601

    Contact Us

    Careers at Crain

    About Pensions & Investments

     

    Advertising
    • Media Kit
    • P&I Content Solutions
    • P&I Careers | Post a Job
    • Reprints & Permissions
    Resources
    • Subscribe
    • Newsletters
    • FAQ
    • P&I Research Center
    • Site map
    • Staff Directory
    Legal
    • Privacy Policy
    • Terms and Conditions
    • Privacy Request
    Pensions & Investments
    Copyright © 1996-2022. Crain Communications, Inc. All Rights Reserved.
    • Topics
      • Alternatives
      • Consultants
      • Coronavirus
      • Courts
      • Defined Contribution
      • ESG
      • ETFs
      • Hedge Funds
      • Industry Voices
      • Investing
      • Money Management
      • Opinion
      • Partner Content
      • Pension Funds
      • Private Equity
      • Real Estate
      • Russia-Ukraine War
      • SECURE Act 2.0
      • Special Reports
      • White Papers
    • Rankings & Awards
      • 1,000 Largest Retirement Plans
      • Top-Performing Managers
      • Largest Money Managers
      • DC Money Managers
      • DC Record Keepers
      • Largest Hedge Fund Managers
      • World's Largest Retirement Funds
      • Best Places to Work in Money Management
      • Excellence & Innovation Awards
      • Eddy Awards
    • ETFs
      • Latest ETF News
      • Fund Screener
      • Education Center
      • Equities
      • Fixed Income
      • Commodities
      • Actively Managed
      • Alternatives
      • ESG Rated
    • ESG
      • Latest ESG News
      • The Institutional Investor’s Guide to ESG Investing
      • Climate Change: The Inescapable Opportunity
      • Impact Investing
      • 2022 ESG Investing Conference
      • ESG Rated ETFs
    • Defined Contribution
      • Latest DC News
      • DC Money Manager Rankings
      • DC Record Keeper Rankings
      • Innovations in DC
      • Trends in DC: Focus on Retirement Income
      • 2022 Defined Contribution East Conference
      • 2022 DC Investment Lineup Conference
    • Searches & Hires
      • Latest Searches & Hires News
      • Searches & Hires Database
      • RFPs
    • Performance Data
      • P&I Research Center
      • Earnings Tracker
      • Endowment Returns Tracker
      • Corporate Pension Contribution Tracker
      • Pension Fund Returns Tracker
      • Pension Risk Transfer Database
      • Future of Investments Research Series
      • Charts & Infographics
      • Polls
    • Careers
    • Events
      • View All Conferences
      • View All Webinars
      • 2022 Innovation Investing Conference
      • 2022 Defined Contribution East Conference
      • 2022 ESG Investing Conference
      • 2022 DC Investment Lineup Conference
      • 2022 Alternatives Investing Conference