[IMGCAP(1)]Last week, I reviewed seven changes to 2011 annual reports that will affect public companies (see Annual Reports: 7 Changes Your Company Needs to Know). In this article, I review another seven major changes being seriously considered on the financial reporting horizon. All of them are potential game changers in terms of the effort by the SEC and other rule-makers to make financial reporting of public companies more transparent.

1. Changes to the auditor’s reporting model – The current auditor’s report has not changed significantly in more than 20 years, and is essentially a “pass/fail” model.  Many investors would like to receive more information from the auditor than the standard three-paragraph report. The PCAOB is conducting a study of several different alternatives to improve and increase the amount of information supplied by the auditor. It seems a foregone conclusion that there will soon be significant changes in the auditor’s report, but the nature and direction of these changes is still up in the air. This is the first thing that will happen, probably within next year. In short, we don’t know what or when the new disclosures will be required, but regulators are saying we’d like to know more about what auditors have learned.

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