Wayne Carnall, the chief accountant in the SEC’s Division of Corporate Finance, had some good advice to dispense to corporate accountants on keeping out of hot water with his department.

Speaking at a Financial Executives International conference in New York, Carnall advised the attendees to concentrate on clarity in their financial statements and disclosures. “Write for the benefit of the investors, not to avoid a comment,” he said. A comment from the SEC, that is. “If something is truly insignificant,” he added, “we do not need pages of documentation.”

Financial executives should view a 10-K or 10-Q filing as a communication document, not a compliance document, he insisted. The SEC will be examining not only the official SEC filings, he warned, but also press releases, analyst calls and press conferences. If material information is stated in those venues and it’s missing from the official filings, the SEC will want to know why. The Reg FD fair disclosure rules have recently been updated to allow many companies to make disclosures via their Web sites rather than through SEC filings, under certain conditions, he noted, but that doesn't mean they can avoid mentioning inconvenient information in their official filings.

And don’t expect the SEC to ease up if the roadmap to International Financial Reporting Standards gets approved by the SEC commissioners. Carnall and his fellow chief accountant, Jim Kroeker, who is in charge of the SEC’s Office of the Chief Accountant, both said at the conference that the SEC has issued a number of comments to foreign companies that use IFRS, Canadian GAAP, and Mexican GAAP, and the SEC staff will continue to ask questions just as they do for domestic issuers.

Indeed, if the SEC approves the move to IFRS, it will be even more important to communicate clearly to the SEC as IFRS requires greater reliance on professional judgment, and the SEC will want to know the basis of that professional judgment. Kroeker warned that companies should not expect to substitute their professional judgment for authoritative standards if they find the standards inconvenient.

Carnall said that companies should take SEC comments seriously and make their last letter their first letter. In other words, they should spend time answering the comments fully to avoid needless back-and-forth exchanges between them and the SEC staff.

One final bit of advice in case those comments generate heated responses in return. “Don’t try to challenge my family heritage or Jim’s family heritage,” said Carnall.

That’s a good piece of advice in dealing with the SEC, or any financial regulator.