What Keeps The SEC Busy - 2009: The American Institute of Certified Public Accountants held its annual "Current SEC & PCAOB Developments Conference" in Washington, DC last month, with speakers from the SEC, the FASB and the PCAOB. Swarms of accountants from all parts of America gather each year to capture year-end audit advice from the SEC’s staff. Even though the economy has belted accountants as well as investment bankers, the attendance was still around 2,500.
Soon, those same auditors will be poring over client’s accounting records, playing a gatekeeper role in the financial reporting process. From the auditor’s point of view: why let a client waste their time - and yours - pursuing a shaky accounting treatment if the SEC has already described its views on it during this conference? Forewarned is forearmed; that’s one reason this conference is so well-attended. The conference is three days’ worth of warnings and reminders to wake up auditors. The smart auditors take advantage of the accounting intelligence gathered by the SEC during the year, and imparted to the audience; the not-so-smart ones skipping the conference learn things the hard way by making the mistakes brought to light by the SEC’s staff. Three days spent at this conference can pay off handsomely in terms of time saved.
What’s in it for investors? They should understand issues covered at this conference as well. The SEC staff sees financial statements in the review process long before investors read annual reports; what curious investor wouldn’t want to know what the SEC has found objectionable in their reviews? While the SEC staff comments won’t predict accounting meltdowns in the making, their comments should remind investors that some firms may either misunderstand or misapply generally accepted accounting principles. When the correction or revision arrives, the ensuing market confusion can be enough of a reason for investors to care about "what keeps the SEC busy."