Accounting Observer > Public Blog - Chairman Cox Testifies

The AAO Weblog covers accounting issues and current events as they relate the practice of investment analysis. All posts prior to September, 2007 are in the public domain, but after September 4, 2007, only subscribers to The Analyst's Accounting Observer will see all posts going forward. Only selected, occasional posts will be released to the public domain from September 4 forward.

Chairman Cox Testifies

Location: Blogs AAO Weblog (Public)
Posted by: Jack Ciesielski	4/26/2006 6:14 AM
Yesterday, SEC Chairman Christopher Cox testified before the U.S. Senate Committee on Banking, Housing, and Urban Affairs. His speech homed in on the fact that most investors in the United States are no longer the upper income elite, but are member of the typical households where investment decisions are made at the kitchen table along with budget and spending decisions. He outlined a four-point initiative for his Commission to complete in order to serve these individual investors better. His plan: 1. Moving from boilerplate legalese to plain English in every document intended for retail consumption; 2. Moving from long, hard-to-read disclosure documents to easy-to-navigate Web pages that let investors click through to find what they want; 3. Reducing the complexity of accounting rules and regulations; and 4. Focusing our anti-fraud efforts on scams that target older Americans. Of course 2) and 3) are most interesting to folks with interests like ours. There was precious little in Chairman Cox's remarks that was new, however; the comments on reducing forms and developing interactive data were a good compendium of what has already been discussed by Cox and other SEC officials in various forums. These remarks however, still did not include any timetable for progress or any mention of milestone events. The same could be said for his remarks on reducing complexity of accounting rules. He mentioned the SEC's off-balance sheet financing study released last summer; we know that it will take years for the FASB to remedy the issues named in it. He also addressed the "codification project" which will bring all accounting principles under one roof - another multi-year (multi-decade?) project. Yet there was one topic conspicuously absent from the Chairman's testimony, one key part in getting at least part 3 of his four-part machine humming: the selection of a chief accountant. The Commission has been operating without a permanent chief accountant for about six months. One has to wonder: is it that hard to find someone who wants the job? One also wonders: is the selection going to take place after the decision on 404 exemptions is made by the Commission? This could be a complicating factor in finding a candidate: any prospectives who have been contacted might be waiting to see where this goes. It would have a pretty direct bearing on the nature of the chief accountant's role for the remainder of Cox's tenure. If the small cappers must follow the 404 rules, there's going to be "natural policing" of those registrants by their internal controls and the private sector - their auditors. If the small cappers get their exemptions, then the SEC - including the chief accountant's office - will probably find themselves dealing with more frequent accounting issues among small fry.

Permalink \| Trackback