SEC Advisory Committee Releases Report on Financial Accounting Improvements

The Securities and Exchange Commission's Advisory Committee on Improvements to Financial Reporting recently presented the findings of its interim report to the commission, which includes 12 developed proposals, conceptual approaches representing the SEC's initial views on certain matters, and currently identified matters for further consideration. SEC Chairman Christopher Cox said in a statement the report was "an important step toward making financial information more useful for investors and reducing unnecessary complexity."

Increasing emphasis on the investor perspective in the financial reporting system, consolidating the process of setting and interpreting accounting standards, and promoting the design of more uniform principles-based accounting standards are some of the key themes covered in the report.

The findings also acknowledge the creating of a disciplined framework for the increased use of professional judgment, and taking steps to coordinate Generally Accepted Accounting Principles (GAAP) in the United States with International Financial Reporting Standards (IFRS).

The committee, which was formed by the Commission last July, was asked to examine the U.S. financial reporting system and to suggest changes needed to increase the usefulness of financial information to investors, while at the same time reducing the financial reporting system's complexity.

While the final report will be released in the coming months, Cox said in a statement that the SEC's professional staff will analyze the study and its proposals, and to provide recommendations to the Commission for possible consideration later this year. "I thank the Committee members for their diligent work to date and look forward to additional proposals and recommendations as the Committee continues its important work over the next few months.