The Center for Audit Quality capped a 10-city tour focusing on the modernization of financial information with a stop in the nation’s capital.
The CAQ met with local and national leaders from the business, investor, regulator and academic communities to share ideas about how to improve the quality, transparency and relevance of financial information to benefit investors.
CAQ executive director Cindy Fornelli hosted the event and was joined in Washington by former Securities and Exchange Commission member Harvey Goldschmid.
FASB Chairman Robert Herz (pictured) spoke about the topic of reducing the complexity of financial information. “A lot of avoidable complexity has been added into financial reporting over the years," he said.
Herz cited revenue recognition rules as an example of an area that needs simplification and called attention to the abundance of literature addressing industry transactions, but “very few overarching principles so in reporting similar things you don’t always get similar answers – let alone answers companies or investors can understand.”
In response to a question on how to develop financial information that is more forward looking, analytical and predictive, PCAOB Chairman Mark Olson noted, “We need to first start by defining what we hope the outcome will be. I’ve seen a progression of thought toward financial reporting and I’ve watched the progression of, and extent to which, GAAP can capture value in corporate America – its strengths and limitations. We need to start at the beginning to evaluate whether or not the information we have can be relied upon.”
