SEC's Pozen Committee to Meet Nov. 2; FASB Votes Six Month Comment Period on Liab-Equity Prelim Views

• consideration of comment letters received by the Advisory Committee [i.e., on its Discussion Paper, or other written statements submitted by Oct. 26, as noted in the  announcement
• consideration of reports of the subcommittees of the Advisory Committee,
• discussion of any recommendations proposed for adoption by the Advisory Committee, and 
• discussion of next steps and planning for the next meeting. 
  

Among the comment letters the Pozen Committee has received so far, are letters from Financial Executives International’s (FEI’s) Committee on Corporate Reporting (CCR), the U.S. Chamber of Commerce, the New York State Society of CPA’s, the Institute of Management Accountant’s (IMA’s) Financial Reporting Committee (FRC), and others.

The Sept. 26 letter from FEI’s Committee on Corporate Reporting (CCR) to the Pozen Committee states: “CCR is very supportive of the formation of the SEC Advisory Committee on Improvements to Financial Reporting… Indeed, formation of such a broad-based committee to address complexity in financial reporting was among the key steps recommended in “FEI’s Recommendations to Address Complexity in Financial Reporting” (FEI’s “Four Point Plan”) published March 29, 2007. As noted in our Four Point Plan, [published March 29, 2007] FEI believes that the success of such a committee “will depend on a shared commitment by all constituents to fundamentally change those facets of the financial reporting process that contribute to complexity.”

The Canadian Accountability Board (CAB), Canada’s equivalent to the PCAOB, asks in its letter to the Pozen Committee that the committee define ‘professional judgment,’ and set parameters for documentation of professional judgment that will ‘stand up to subsequent second-guessing’ by regulators. “Such guidelines may be particularly important as the use of fair values increases,” CAB adds.  

CAB also suggests the Pozen Committee provide: “a set of examples of sound application of professional judgment would provide valuable guidance, if each set out (a) the assumed facts/circumstances; (b) the relevant accounting or auditing standards; and (c) the application of the standards to the facts, demonstrating how professional judgment was applied.”

More Info on Pozen Committee

For those hungry for more info on the Pozen Committee, the AICPA’s Journal of Accountancy published an interview with Pozen in its Oct. 2007 issue.

Additionally, FEI’s Financial Executive Magazine has an interview with Pozen in an upcoming issue.

Pozen will provide a keynote address at FEI’s flagship Current Financial Reporting Issues (CFRI) conference Nov. 12-13 in NYC. Register now for CFRI so you won’t miss Pozen and many leading lights from the SEC, FASB, PCAOB, IASB, leading preparers and auditors, and more!

What Else Did SEC Announce Yesterday? See Pozen Keynote at FEI CFRI Conf.

In case you missed our post yesterday, the SEC also announced the formation of a new Office of Interactive Disclosure, and released its long-awaited staff report on its findings from its review of 350 companies’ exec comp disclosures. What’s the bottom line as to what the SEC staff found lacking in the exec comp disclosures? “Where’s the Analysis?” according to John White, SEC Director of Division of Corp Fin, told a legal conference in a speech by that name yesterday.

What Did FASB Decide Today? Six Month Comment Period on Liab-Equity PV
In what may be record time for a FASB meeting (6 minutes), the FASB just concluded a board meeting at which it discussed one issue: the upcoming Preliminary Views document on its Liability-Equity project.

The board agreed with the staff's recommendation that there be a six month comment period on the Prelim Views doc, longer than the normal 120 day period for such a doc, due to:

• complexity of the issue,
• interaction with the FASB-IASB's joint Financial Statement Presentation Project,
• IASB's projected timetable on its related project on liablity-equity.

Staff said one other question raised related to characterization of dividends, and they decided to seek comment on that through the preliminary views doc. FASB board members urged staff to do outreach on this point during the comment period.

The comment period being the last issue to decide before issuing the Preliminary Views doc, the board authorized the staff to proceed to a preballot draft (which staff expects to circulate to the board within the next week) and a ballot draft for the board to vote on (which staff anticipates will be ready 'in the first part of November.'

NOTE: Although not mentioned at today's FASB meeting, as a reminder, FASB Chairman Bob Herz previously told FEI's Global Financial Reporting Conference on Sept. 28 that he anticipates FASB's Business Combinations Standard to be issued Oct. 11.

Oct 10, 2007, 9:28 AM by Edith Orenstein

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