What Keeps The SEC Busy - 2011: The American Institute of Certified Public Accountants held its annual “Current SEC & PCAOB Developments Conference” in Washington, DC last week, including speakers from the SEC, the FASB, the IASB and the PCAOB. Call it “Accountant-palooza:” accountants from all parts of the country stage a homecoming of sorts to listen to what the SEC has to say about accounting issues. In a frail economy, the conference attendance exceeded 1,300; including remote locations, more than 2,300 were tuned into the SEC’s show. That’s quite a draw, especially at this time of year.
In a matter of weeks, the accountants attending the conference will be assembling their firms’ 10-K filing - the annual exercise in communications with shareholders. (Most often, it ends up being an annual exercise in compliance.) Shortly afterwards, the auditors attending the conference will be scrutinizing the accounting records. Accountants and auditors invest their time in this conference so they don’t waste it by stepping onto land mines already mapped out by the SEC. Time is always precious, and nobody - auditors or preparers - want to waste time negotiating with SEC staff over accounting treatments covered by the Commission staff during this conference. The conference fills up three full days with “heads-ups” for auditors and preparers. Forewarned is forearmed.
What’s in it for investors? Insight. Financial reporting problems don’t originate after financial statements are filed; they originate inside the companies and at much lower depths of transaction detail than the highly distilled levels that investors see in the finished product - the financial statements. The Commission is charged with ensuring that investors receive fair disclosures; cautious, skeptical investors should be curious about what accounting issues matter to an agency whose reason for being is - investors. That should be enough of a reason for investors to care about “what keeps the SEC busy.”