SEC Issues Shareholder Proposals

The SEC has posted the following shareholder proposed rules: Shareholder Proposals to the Election of Directors and Shareholder Proposals.  The proposals should make waves and provide for some interesting comments and public debate.  The most contentious items deal with, to what degree shareholders have access to corporate ballots (to elect directors, etc.).  The proposals put forth include a minimum percentage ownership to have such access, that depending on your view, may be to high or low (or just right).  The proposals also deal with whether shareholder proposals should be binding on company management.  The comment period is 60 days.  

Filed under: REAL WORLD

SEC Chairman Cox to Testify on State of the Securities Markets

SEC Chairman Christopher Cox will testify before the Senate Banking Committee on Tuesday, July 31, 2007, regarding: The State of the Securities Markets. 

Filed under: REAL WORLD

Congressman Frank Praises Work on PCAOB Auditing Standard No. 5

House Financial Services Committee Chairman Barney Frank praised SEC Chairman Christopher Cox and the commission for completing work on approving the PCAOB Auditing Standard No. 5 for auditing internal controls.  The SEC approved AS/5 in its form as adopted by the PCAOB in May 2007.  

Filed under: REAL WORLD

SEC Issues Final Electronic Proxy Material Rules

The SEC has issued final rules on electronic proxy material rules: Shareholder Choice Regarding Proxy Materials.  The rules require issuers and other proxy solicitors to post proxy materials on an internet website and provide notice to shareholders of their availability.  The notice must also contain a method for shareholders to request proxy materials via paper copy thru the mail or email.  Shareholders may choose a permanent election to receive materials via mail or email.  The SEC believes the rules will reduce the costs associated with proxy materials and provide greater shareholder access to materials. 

Filed under: REAL WORLD

SEC to Issue Concept Statement to Allow US Issuers to Use IFRS

At an open meeting today, the SEC voted to allow the publication of a concept statement that would allow US issuers choose from US GAAP or International Financial Reporting Standards.

Filed under: REAL WORLD

SEC Approves PCAOB Auditing Standard No. 5

In an open meeting today, the SEC approved the PCAOB’s Auditing Standard No. 5 which replaces the infamous AS/2.  More details as they become available.

Filed under: REAL WORLD

SEC Suspends Terrorist Sponsor Tool

SEC Chairman Cox announced that the SEC has temporarily suspended access to its recently launched tool for verifying public companies that have investments in states known to finance terrorists.  As previously reported, the list had come under criticism from Congressman Barney Frank for its inclusion of several companies that should not have been on the list.  In suspending the tool, Mr. Cox noted:

To address these and related concerns, we are temporarily suspending the availability of the web tool while it undergoes reconstruction. We will work to improve the web tool so that it meets the various concerns that have been expressed. Alternatively, our staff is considering whether the use of interactive data tags applied by companies themselves could permit investors, analysts and others to easily discover this disclosure without need of an SEC-provided web tool at all. In the interim, the companies’ disclosure regarding their business contacts in the five nations will continue to be available through the SEC’s EDGAR database, and findable using our new full-text search capability.

The Commission staff will also consider whether to recommend a Concept Release on the question of how best to make public company disclosure of activities in terrorist states more accessible.

Filed under: REAL WORLD

Finding the House of GAAP on the Internet

One of the first lessons in most accounting courses is the House of GAAP, or what weight certain accounting guidance carries in generally accepted accounting principles. gaap360 takes you on a tour of the Internet to locate available  accounting principles within the categories of the infamous House. Some of the pieces of the House are free and available on the Internet – others come at a price.      

The House

The House of GAAP was first published in June 1984 by Steven Rubin in the Journal of Accountancy.  The House is comprised of four hierarchical categories of generally accepted accounting principles.  The four categories are set upon a foundation of basic concepts and broad principles.  Technically, the foundation does not establish GAAP, but rather provides basic principles and precepts by which GAAP is established. 

If accounting guidance is provided in more than one category, the guidance in the higher category (Category A being the most authoritative) has precedence.

Currently, the FASB, along with the International Accounting Standards Board (IASB), is reviewing the sources of GAAP in its ongoing Conceptual Framework Project.  This project may have future impact on the House.        

The Foundation

v      Financial Accounting Standards Board (FASB) Concept Statements ^Free

Category A (the most authoritative GAAP)

v      FASB Statements of Financial Accounting Standards ^Free

v      FASB Interpretations ^Free

v      FASB Staff Positions ^Free

v      AICPA Opinions and Interpretations (not superseded) ^$

v      AICPA Accounting Research Bulletins (not superseded) ^$

v      SEC Rules and Interpretive Releases (for SEC registrants) ^Free

Category B (less authoritative GAAP than Category A)

v      FASB Technical Bulletins ^Free

v      AICPA Industry Audit and Accounting Guides ^$

v      AICPA Statements of Position (not superseded) ^$

Category C (less authoritative GAAP than Categories A and B)

v      EITF Consensus Positions ^Free

v      AICPA Practice Bulletins ^$

Category D (the least authoritative GAAP)

v      AICPA Accounting Interpretations ^Free

v      FASB Staff Q & As ^Free

In addition, widely recognized industry practices fall into this category.

Useful websites for all accounting students

v      Securities & Exchange Commission

v      Public Company Accounting Oversight Board

v      Financial Accounting Standards Board (including EITF)

v      American Institute of Certified Public Accountants

v      International Accounting Standards Board

Filed under: ACADEMIC

SEC To Discuss Concept Release on Whether to Allow Registrants Choice of US GAAP or IFRS

On July 25, 2007, the SEC will discuss the possibility of issuing a proposal that would allow registrants the ability to choose from US GAAP or IFRS in submitting financial statements in filings with the agency. Recently, the SEC issued a proposal to eliminate the IFRS-to-US GAAP reconciliation for foreign issuers. The SEC will also discuss possible changes to rules regarding shareholder proposals.

Filed under: REAL WORLD

SEC Chairman Cox Calls For Stronger Governmental Accounting Standards Board (GASB)

In a speech before Town Hall of Los Angeles, SEC Chairman Christopher Cox spoke of the need to strengthen the independence of the Governmental Accounting Standards Board(GASB) and for more SEC power to police the municipal marketplace. Recently, the GASB has been under attack by constituents questioning its existence.  Recent abuses in the municipal bond markets has shown the need for greater disclosure requirements over these securities and their issuers.  Mr. Cox noted about the GASB and the SEC’s power over municipal bond issuers:

The importance of the complete independence of accounting standard setters from the entities whose financial statements they regulate is a central precept of well functioning capital markets. And the need for that independence is just as great in the municipal market as it is in the corporate market.

Adherence to the Governmental Accounting Standards Board’s standards by all issuers of municipal securities is just as important as adherence to the Financial Accounting Standards Board’s standards by all corporate issuers. But under current law, the Commission does not have the same authority to require the use of proper accounting standards by municipal issuers that it does for issuers of corporate securities.

Filed under: REAL WORLD