Watch for SEC Guidance Affecting 2001 Reports
The Securities and Exchange Commission (SEC) is mulling over a draft of new guidance that could affect preparation of annual reports for the year just ended. The draft was submitted by the Big 5 firms and the AICPA, all of whom are petitioning SEC to issue speedy guidance in the form of an “interpretive release” applicable to the MD&A (Management Discussion and Analysis) portions of 2001 annual reports on Form 10-K.
The SEC petition is the first in a series of steps planned by the Big 5 in response to the Enron collapse and resulting loss of public confidence in financial reporting. A second step under consideration is a follow-on petition that would urge the Commission to set rules for the minimum disclosure requirements for the three areas addressed in the draft interpretive release:
(1) liquidity and capital resources, including off-balance sheet arrangements,
(2) trading activities involving non-exchange traded contracts, and
(3) related party transactions, including relationships and transactions on terms that would not be available from clearly independent third parties.
SEC Chief Accountant Robert K. Herdman said the SEC staff intends to study the petition on an expedited basis, and it expects to make recommendations for consideration by the Commission. “Whether or not the particular guidance in the petition is adopted by the Commission,” Mr. Herdman cautioned, “public companies will do well to consider the objectives of the disclosure outlined in the petition and the materiality of the matters discussed in the draft guidance."
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Which isn’t completely true. I mean, occasionally I drop by when I manage to sneak out of the nonstop frat party over at Going Concern, but I’m mostly a wallflower over there. I’m happy to say that I’ve been given express permission (or explicit orders, if you like) to wander over here to AccountingWEB more often.
Why is that, you might ask? My job is to replace the irreplaceable Gail Perry as Editor-in-Chief. What does that mean? I don’t really know! I think it’ll be fun getting a feel for things, throwing in my own thoughts here and there, and listening to the discussions you’re having about the accounting profession.