SEC PCAOB Developments

Last week I attended and presented at the AICPA SEC & PCAOB Developments Conference in Washington DC.  At least I attended the second and presented on the third day in DC.  Due to weather problems in both Dallas and Washington, my Sunday flight was cancelled and the earliest flight available was Monday evening.  So instead of trying to figure out a way to get there for Monday I decided to spend a night in my own warm bed and attend the first day of the conference virtually on the internet.  From what I heard from the speakers and the chats on the internet, I was one of many that had trouble getting to Washington from all over the country.  Attending virtually was great.  While you don’t have the networking opportunities of being there in person, the chat kept me interested and I was able to get a great feel for the tone of the conference.

While my opinion is biased (I served on a panel discussing the revised COSO Internal Control Integrated Framework), the theme of the conference this year was internal control over financial reporting.  It wasn’t that the AICPA picked this theme.  The speakers did it by mentioning internal control in presentation after presentation and panel after panel.  I am not overstating fact when I say ever single SEC and PCAOB panel talked about internal control.  From asking why companies don’t disclose internal control failures until after a restatement to questioning management’s positive assertions about internal control when the auditors are found not to have performed an appropriate audit over that assertion, the SEC is clearly looking to renew its interest in internal control reporting for the first time since in several years.  Meanwhile the PCAOB’s recent report questions whether auditors are consistently complying with AS 5.  Even without a revised internal control framework to deal with preparers should be spending more time documenting, testing and evaluating their internal controls over financial reporting.

I will spend more time talking about internal controls in my next blog.  Meanwhile, here is a list of other quotes and notes from the three day conference:

  1. Keynote speaker David Walker – we’ve tripled the national debt to over $17 Trillion in 13 years, but that is only what is on the balance sheet; what is not on the balance sheet  makes the debt number over $70 Trillion from “only” $20 Trillion 13 years ago.
  2. Paul Beswick, SEC Chief Accountant – IFRS took a back seat to the rule making requirement so Dodd-Frank and the JOBS Act; it was not a matter of lack of importance of IFRS, but simply a rule-making bandwidth issue that has kept IFRS on the back burner of the SEC for the last couple of years.
  3. OCA Panel/FASB-IASB Panel – the Chief Operating Decision Maker reporting package is increasingly irrelevant in determining which segments to report when CODM’s have drill down access to details that didn’t exist when the standard was written – this needs to be addressed when the FASB relooks at segment reporting.
  4. Enforcement Division Panel – Whistleblowers are increasingly important to the enforcement division; many of their cases are now starting from whistleblower action and the use of whistleblowers is changing the willingness of companies to self-report issues as well as increasing their willingness to cooperate with the SEC

If you want to  know more check out the many articles and press releases that come out in conjunction with the conference

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