What Keeps The SEC Busy - 2008 The American Institute of Certified Public Accountants held its annual "Current SEC & PCAOB Developments Conference" in Washington, DC last week, featuring speakers from the SEC, the FASB and the PCAOB. It’s an annual "winter carnival of accountants" from all across America who meet each year to gather year-end audit intelligence from the SEC’s staff. This year, the carnival’s attendance approached 3,000.
Over the next few months, auditors will be swarming over client’s accounting records, playing their critical role in delivering the financial reporting package to investors. As in any service endeavor, time is the most precious asset: why waste time letting a client pursue an easily challenged accounting treatment if the SEC has already described its approach to handling it? Forewarned is forearmed, and this conference provides auditors and companies with plenty of forewarning. Over a three-day span, it’s chock-full of warnings and reminders that can in the literal sense, too: the conference was beamed to the West coast and London.) In planning for accounting risks they might encounter in the audit engagement, the three days spent at this conference might pay off in a big way in terms of time saved later.
It makes sense for investors to understand issues covered at this conference too. The SEC staff sees financial statements in the review process long before investors read annual reports; investor curiosity should be aroused by what the SEC sees before the financials are made ready for prime-time. SEC staff comments don’t predict accounting disasters - but their remarks serve as a reminder that some firms may either misunderstand or misapply generally accepted accounting principles. When the correction/restatement finally comes, there’s often ensuing market confusion. That’s reason enough for investors to care about what keeps the SEC busy.