Center for Financial and Accounting Literacy

Center for Financial and Accounting Literacy

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Recent developments likely to affect you...

Changes in Proxy Rules: Will They Help or Hurt?

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 in expected in early 2010 when the Commission considers controversial new rules on proxy access that were proposed in June 2009. (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. Some view these solutions as misguided or overly simplistic. But the proposals may succeed in challenging others to come up with better ways to improve oversight of the financial sector. Proposals released by the Treasury Dept. in 2009 would arm investors with significantly more information and require companies to comply with extensive new reporting requirements particularly in areas related to risk and governance. 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?”

SEC Approves New Auditor Reporting Requirements

Finally, the SEC has approved the PCAOB's proposed rules on auditor reporting. These rules are one of the reforms required by the Sarbanes-Oxley Act of 2002. Recent events, such as the charges against Madoff's auditors and life-threatening lawsuits against accounting firms, have emphasized the need for reforms that provide more transparency about audit firms. The special reporting requirement for certain current events 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)

Will Surprise Audits by CPA Firms Prevent Future Ponzi Schemes?

The SEC is considering several reforms in the wake of the Madoff scandal as a way to prevent future abuses involving investment advisers. One proposed solution involves a requirement for annual "surprise exams" of investment advisers by independent public accountants to better assure the safekeeping of investor assets. Will it work? (more)

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.