The three new members of the Securities and Exchange Commissioners who have just been approved by the Senate will have to hit the ground running to cope with a multitude of unfinished business.
One of the main items on the agenda for new members Luis Aguilar, Elisse Walter and Troy Paredes will be setting a roadmap for the transition to International Financial Reporting Standards. That’s going to be a top priority for this summer, as more accounting firm leaders and organizations press SEC Chairman Christopher Cox to set a “date certain” for the convergence of IFRS with U.S. generally accepted accounting principles. The possibility of having to maintain two sets of books for both IFRS and GAAP for many years isn’t very attractive to many companies.
Another important item on the agenda is Extensible Business Reporting Language. Cox has been pressing for this change too, trying to get more companies to participate in the voluntary program for filing their financial statements in XBRL so their statements can be more easily analyzed by investors. Now the voluntary filing program is about to become mandatory, starting with the 500 largest public companies, if the proposed rules go into effect.
Also on the agenda are credit ratings. The SEC voted last month to propose a series of reforms to credit-rating agencies to make them more transparent and more accountable to investors. The full complement of SEC commissioners will be needed to deal with the ramifications of these sweeping proposals.
On top of that, the SEC is launching an ambitious “21st Century Disclosure Initiative” aimed at reexamining how companies and other entities should make disclosures to take advantage of the latest technologies. One of those technologies will undoubtedly be XBRL, but the disclosure system of the future is surely going to go way beyond just a Web markup language. The first part of the study is scheduled to be completed by the end of the year. The SEC plans to finish overhauling its old Edgar system of financial disclosures by the end of the year too.
That’s a lot on the plate of the new SEC commissioners, not to mention all the enforcement, oversight and regulatory work the commission typically does, while now facing the meltdown in the mortgage and credit markets, and the accompanying ramifications on Wall Street. The new commissioners will certainly be kept very busy through the end of their terms.
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