Financial regulators today pledged to act quickly on recommendations to make financial statements more useful and transparent.
The final report of the 17-member Advisory Committee on Improvements to Financial Reporting recommended improved disclosures about fair value and historical cost accounting.
The committee did not try to resolve which type of accounting was preferable.
“Certain types of assets and instruments are appropriately valued at historical costs, and certain at fair value,” Robert Pozen, chairman of the advisory committee and chairman of Boston-based MFS Investment Management Inc., said at a press conference at the SEC in Washington this morning.
“Our effort was to try to make it a lot clearer what portion of earnings is derived from historical cost accounting, and what is related to fluctuations in the market that come from fair value,” he said.
Companies should be required to restate earnings only when there are significant problems, the report recommended.
More than 9% of public U.S. companies issued restatements in 2006, and that figure declined slightly last year, Mr. Pozen said.
The percentage was far higher than restatements from public companies in other countries, and well above the 2% level of restatements as recently as 1998, he said.
Steps should be taken to increase the number of errors corrected, and to increase disclosure.
However, he added, “When you have as many restatements as we have now, we’re almost confusing investors as to what is a really important problem and what isn’t.”
SEC Chairman Christopher Cox said the SEC has acted on several of the recommendations, including proposed guidance issued yesterday to companies about disclosures on websites.
The agency is expected to consider the rest of the 25 recommendations this year and next.
The Securities Industry and Financial Markets Association of New York and Washington supports the "creative pilot program, which should provide some instructive and useful data on plaintiffs' view of industry arbitrators and how those arbitrators do or do not affect awards," SIFMA spokesman Travis Larson wrote in an e-mail.
No comments:
Post a Comment