Center for Financial and Accounting Literacy

Center for Financial and Accounting Literacy

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Recent developments likely to affect you...

New Auditor Reporting Requirements Take Effect in 2010

New rules on auditor reporting take effect in 2010. These rules have their roots in the Sarbanes-Oxley Act of 2002. But they didn't become a reality until recent events, such as the charges against Madoff's auditors and life-threatening lawsuits against accounting firms, further reinforced the need for more transparency about audit firms. Investors will be most interested in the special reporting requirements for certain current events and the annual reporting requirements. The special reporting requirements were originally scheduled to take effect for events occurring on or after October 12, 2009 but were postponed to events occurring on or after December 31, 2009. The annual reporting requirements will take effect on June 30, 2010. (more)

Changes in Proxy Rules: Added disclosures Take Effect in 2010

The SEC adopted enhanced proxy disclosure requirements in December 2009. These new rules take effect as of February 28, 2010. Companies and boards of directors will need to hustle to get meaningful disclosures ready in time for the upcoming 2010 proxy and annual reporting season. But the added information should prove helpful to investors for both voting and investment decisions. The next step forward is expected in early 2010 when the Commission considers controversial new rules on proxy access that were proposed in June 2009. (more)

Surprise Audits by CPA Firms May Help Prevent Future Ponzi Schemes

In the wake of the Madoff swindle, as well as other recent Ponzi schemes and abuses involving investment advisers, the SEC has initiated a number of reforms, including a requirement for annual "surprise exams" of investment advisers by independent public accountants to better assure the safekeeping of investor assets. These reforms take effect March 12, 2010. The SEC has also provided interpretive guidance for independent accountants who conduct the surprise audits. The new reforms and guidance are all designed to protect investors who do business with investment advisers registered with the SEC. (more)

New Regulatory Era Will Bring Broader SEC Scrutiny

Regulatory reforms have been moving slowly in the aftermath of what has been called “the most severe financial crisis since the Great Depression.” But the pace may pick up soon. In January 2010, President Obama injected a new sense of urgency into the reform process by proposing new fees for banks and limits on their scope and size. The rules are controversial and may succeed in challenging others to come up with better ways to improve oversight of the financial sector. At the same time, lawmakers are considering massive reforms along the lines suggested by the Treasury Dept. in 2009. Following a familiar pattern, the new regulatory system will rely heavily on the scrutiny of the US Securities and Exchange Commission (SEC) as the investor's advocate. The Center commends the SEC for assigning a priority to regulatory reform initiatives and for taking a proactive leadership role in helping to shape the coming reforms. For more complete coverage, see our special report on “New Era of Financial Regulation: How Will It Affect You?”

Rosemary Schlank

Director

Center for Financial and Accounting Literacy

Center Salutes Life and Legacy of Accounting Icon Ben Neuhausen

Ben lost his courageous battle with cancer on July 31, 2009. Though his distinguished career ended far too soon, Ben’s accomplishments were many, and he leaves a rich legacy of memories that are overflowing with lessons in both literacy and life. Read our summary of his views and accomplishments.

Quality-of-Accounting Scorecards

Are US accounting standards getting better or worse? Are they more user-friendly for investors? Do they lead to better decisions? The Center monitors key benchmarks, including progress toward noteworthy reports and recommendations. You can trust our Scorecards for an objective assessment. (The scorecards are being updated and will be available soon.)

Recent Articles by Rosemary Schlank

Ready for FASB's Accounting Standards Codification?

E-merging Issues and Trends

Improving Transparency in Turbulent Times

Disclosures and Audit Committees are Key in Turbulent Times

Financial Reporting in Turbulent Markets

New Accounting for M&A Affects Earnings and Deals

XBRL: What Should Companies Do Now?

Financial Reporting Directions Drawn From the Top Governance Issues of 2005

FASB Must Weigh Costs and Benefits of Accounting Changes Expected in 2005

Changing Capital Markets - Risks for the Information Age

Accounting Standards Codification

Investors in public companies that report under US generally accepted accounting principles (GAAP) can look forward to subtle but important improvements in financial reporting now that the US Accounting Standards Codification is live and operational. Many public companies are weighing the merits of a move toward more plain-English explanations and less technical jargon in the notes to the financial statements starting in third quarter 2009. More Accounting Topics

XBRL Reporting

Happy news for investors. XBRL reporting has arrived, starting with 2nd quarter 2009 SEC filings. XBRL stands for eXtensible Business Reporting Language, a technology that allows companies to tag the information provided to the SEC in a way that allows investors and prospective investors to read the tags and interact with the data.