John White of the SEC was the keynote speaker, leading off the conference early this afternoon. He spoke on three topics, with the usual government disclaimers first about how these were his personal comments, not those of the SEC…
His three topics were:
Audit Standard 5 and the SEC’s Management Guidance – The SEC’s final guidance for management on implementing Section 404 of Sarbanes-Oxley should be out “soon.” White reiterated that the SEC doesn’t currently plan to extend the deadline for smaller companies. However, he noted that the SEC must still publish AS5 for comment and approve it. He also reminded listeners that larger companies already in compliance don’t have to change their procedures “unless they want to.”
Executive Compensation Companies preparing to issue their first proxies under the Securities and Exchange Commission’s new executive compensation disclosure rules, take note: Don’t expect any new rule making in that area this year.
SEC Press Release regarding IFRS – Two other SEC releases are expected this summer related to International Financial reporting standards. One is a proposing release to eliminate the reconciliation requirement for foreign private issuers starting in 2009. The other is a concept release asking for input on whether U.S. domestic issuers should be given the option report in either International Financial Reporting Standards or U.S. Generally Accepted Accounting Principles.
Referring to the concept release, White said, “We’re hoping that people will take this as a wake-up call that this has become an important topic for U.S. domestic issuers and financial reporting generally.” ) PS. Compliance Week had to import someone from PwC UK to talk about IFRS. They couldn’t identify a good expert in the US!
A couple of other tidbits…
He said that the SEC acts as oversight of the PCAOB regarding audit firm inspections. How exactly do they do that?
With regard to AS 5, White said that although the SEC has issued this new guidance, companies do not have to change or do anything different if they have a process “that works for you”, if you’re already “doing a good job.” How is this exactly defined? By the audit firms?
My question to Mr. White was:
“Do you think smaller, next tier non-Big 4 audit firms will get better at serving smaller public companies so that the Big 4 stays focused on large global companies? After all, in my opinion it’s the bigger firms who have been trying to impose their big firm approach and their concern about liability that has driven the high costs, especially for smaller public non-accelerated filers.”
White’s response: “Better to ask Mark Olson of POCAOB tomorrow… But there is a massive effort at PCAOB too help smaller firms gear up to work better with non accelerated filers.”