AICPA SEC-PCAOB Developments Conference

I had the opportunity to attend the AICPA National Conference on Current SEC and PCAOB Developments recently. If you work in the public company reporting or auditing world and didn’t attend this conference, you missed a great opportunity to get caught up on the latest developments and areas of focus from the IASB, FASB, FinREC, SEC Division of Corporate Finance, SEC, Office of Chief Accountant, SEC Enforcement Division, and the PCAOB. And the updates aren’t by some low level staff member. They are presented by Board Chairmen and Division Chiefs. The best part is the extensive question and answer sessions throughout the conference. Most speakers answer questions at the end of each of their sessions, but, in addition, at the end of each of the first two days of the conference, key speakers from the day spend over an hour just answering questions. There is no way to give the conference justice in a short blog, but I did want to highlight a few things I found interesting. For the ninth time the SEC Division of Corporate Finance spent time talking about the requirements around segment disclosures. If you have not received a comment letter from the SEC on your segment reporting, just wait, you will. In addition, you better have your reasons for your segments well documented and they better align with the reports your Chief Operating Decision Maker is using. One interesting point was made by a member of the SEC Office of Chief Accountant related to the PCAOB release on independence and mandatory auditor rotation. He raised the question “does the growth of consulting practices at audit forms represent a greater risk to audit quality (and independence) than tenure of the auditor?“ It’s an interesting point and one that my auditor colleagues should think about as they consider where the PCAOB may go in developing proposed rules based on the feedback received on the concept release. Another area of emphasis that was brought up several times by the SEC representatives was the use of pricing services to develop level 2 fair value information. While there is nothing wrong with using the services, if management and the company auditors do not understand the assumptions and models used by the services, the SEC and PCAOB are of the opinion that a control deficiency and an audit deficiency is likely to exist. I guess the days of saying we are CPAs, not valuation specialists are over. Like it or not, accounting standard setters have embraced fair value and if you are not proficient in the language and techniques of valuation, then you no longer have adequate knowledge to be a preparer or auditor of financial statements in the modern world. There is so much more I could talk about like the SEC views on IFRS and the fact that any word for the SEC on adoption of IFRS by the U.S. is not likely to come until well into 2012 or the stated desire to frame the “audit” requirement around conflict minerals certification so that it won’t be limited to CPAs, but I only have room for so much. If you regret not attending this year and don’t want to be left behind by the over 2,000 of your colleagues that attended this year, but sure leave a reminder to yourself to attend the 2012 conference next year. I’m sure it will be another great one.

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