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SEC Issues IFRS Concept Release

As expected, the SEC issued a Concept Release that seeks input on the concept of allowing US issuers chose between US GAAP and International Financial Reporting Standards.  The SEC is providing a 90 day comment period.

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Filed under: REAL WORLD

First Stock Options Backdating Trial Ends In Guilty Verdict

According to this story reported by the AP, former Brocade Communications Systems Inc. CEO Gregory Reyes was convicted Tuesday of defrauding investors for backdating stock options.

Filed under: REAL WORLD

Accounting Standard Setting

The Securities and Exchange Commission (SEC) has statutory authority to set accounting standards in the United States. However, the SEC has largely deferred to private sector entities or board to establish generally accepted accounting principles (GAAP) in the United States.  Historically, three primary private sector entities have established accounting standards in the United States: 

Committee on Accounting Procedure (CAP) – was an entity of the American Institute of Certified Public Accountants (AICPA).  CAP issued accounting standards from 1939 to 1959.  CAP issued Accounting Research Bulletins. 

Accounting Principles Board (APB) – was also an entity of the AICPA.  The APB issued accounting standards from 1959 to 1973.  The APB issued Opinions and Interpretations.    

Financial Accounting Standards Board (FASB) – established in 1973, is the current day private sector accounting standard setter. The FASB issues Statements of Financial Accounting Standards, Interpretations, Technical Bulletins, Staff Positions and Implementation Guides.  The FASB also established the Emerging Issues Task Force (EITF) to deal with more specific accounting issues or particular application.  The EITF drafts issue consensus which are ultimately reviewed by the FASB.

Filed under: ACADEMIC

SEC Files Fraud Charges Against First BanCorp

The SEC announced today that it has filed financial fraud charges against First BanCorp alleging “that former senior management of the NYSE-listed, Puerto Rico-based bank holding company concealed the true nature of more than $4 billion worth of transactions involving “non-conforming” residential mortgages.”  The Complain against First BanCorp is available, here.

Filed under: REAL WORLD

SEC Chairman Cox: Financial Reporting Has Become To Complex

SEC Chairman Christopher Cox welcomed the members of the new SEC Advisory Committee on Improvements to Financial Reporting at its first meeting on August 2.  Mr. Cox indicated:

  

The truth is, financial reporting has become overly complex. That means not only are financial statements difficult for investors to understand, but also companies incur excessive costs as a result of complying with voluminous and overly prescriptive accounting and reporting rules.

The Advisory Committee is expected to make recommendations to the SEC on how to make the US financial reporting system less complex and more investor friendly.

Filed under: REAL WORLD

FASB Seeks Input on Whether to Add Insurance Contract Project

The Financial Accounting Standards Board is seeking constituent input on whether to add a project on accounting for insurance contracts.  According to the FASB, the objective of such a project would be to:

develop a common, high-quality standard that would address recognition, measurement, presentation, and disclosure requirements for insurance contacts. The project would provide accounting and reporting guidance for both the issuer and the holder of an insurance contract.

Comments on the proposed project are due November 16, 2007. A copy of the exposure draft is available, here.

Filed under: REAL WORLD

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

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