As part of our investment/insurance package, my wife and I both own variable universal life policies underwritten by a large carrier.
Now I could spend the entire column debating the pros and cons of VUL ownership, but the point here is that at regular intervals, we're mailed these monstrous reports on the investment vehicles contained therein.
Despite its size, or more likely because of it, the insurance company is not in lockstep with the paperless movement. In any event, the literature we receive is, in many instances, larger than my local phone directory, and poring over it can only be compared with watching C-span on two hours' sleep in terms of excitement.
My wife often exasperatingly asks me, "Why can't they just write these things in plain English?"
I really don't have a cogent answer.
But apparently the bride isn't the only one asking that question of late.
Recently House lawmakers convened to hear from myriad regulators and financial association leaders on methods that could make financial reports more user-friendly for investors and the general public.
Among those making the trip to Capitol Hill were Financial Accounting Standards Board chair Robert Herz, acting Public Company Accounting Oversight Board chair Bill Gradison, AICPA president and CEO Barry Melancon, and Colleen Cunningham, chief executive of Financial Executives International.
As expected, each offered their own theories to the
Subcommittee on Capital Markets, Insurance and Government-Sponsored Enterprises on how to distill complex data into a simpler vehicle.
Suggestions included some not-so-subtle hints that FASB prioritize its ongoing framework and that preparers and users of financial statements assume an active role to ensure financial reporting is usable and understandable.
The AICPA's Melancon testified on the adoption of Extensible Business Reporting Language, a natural segue since the institute has been one of the leading proponents and drivers of XBRL, which for those of you who are tech-impaired like me, tags financial information through a wide range of applications through the business reporting chain.
Melancon opined that to accelerate acceptance of XBRL preparers would need to simplify complex reporting and to complete the convergence of international reporting and auditing standards as soon as possible.
To be sure, as sound a strategy as any, but it's the time frame associated with international convergence that sort of worries me. I think of global accounting standards much like a Category 6 storm --something we're never likely to see -- until we do.
Rebecca McEnally, director of capital markets policy for the Chartered Financial Analyst Centre, told lawmakers that financial reports and statements should be prepared from the perspective of the common stock owner, whom she described as "the last residual claimant on a company's resources."
Finally -- a strategy that would usher in financial statements drafted so that a cabdriver or fledgling 401(k) participant could understand.
Now if she would be so kind as to convince the powers that be about my VUL statement, we may be on to something here.
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