WASHINGTON, D.C.-The Securities and Exchange Commission has released a draft of a five-year strategic plan that calls for a single set of high-quality global accounting standards.
While the SEC has not yet decided on the fate of the proposed roadmap for adopting International Financial Reporting Standards, SEC Chair Mary Schapiro and Chief Accountant James Kroeker have both said that the commission will be turning its attention to the roadmap this fall.
In the meantime, the draft strategic plan (online at www.sec.gov/about/secstratplan1015.pdf) listed, among several regulatory reforms, "raising international regulatory standards and cooperation, including working toward improvement of accounting standards in the wake of the credit crisis and the development of a single set of high-quality global accounting standards."
Recently, a survey by Big Four firm Deloitte found that some 70 percent of 150 chief financial officers and finance professionals support approval of the SEC's roadmap for adopting International Financial Reporting Standards.
The SEC also said that it plans to "continue to promote the establishment of high-quality accounting standards by independent standard-setters in order to meet the needs of investors." The SEC plan outlines the commission's strategic goals for fiscal 2010 through 2015 and contains more than 70 initiatives.
In overseeing the Financial Accounting Standards Board, the SEC plans to strengthen and support FASB's independence and maintain the focus of financial reporting on the needs of investors, in accordance with recommendations from the SEC's Advisory Committee on Improvements to Financial Reporting.
The SEC said that it would also support FASB's efforts to improve financial reporting, including recent standard-setting initiatives in areas such as off-balance-sheet accounting and accounting for financial instruments.
In terms of international standards, the SEC also aims to take action. "Due to the increasingly global nature of the capital markets, the agency will promote high-quality financial reporting worldwide through, among other things, support for a single set of high-quality global accounting standards and promotion of the ongoing convergence initiatives between the FASB and the International Accounting Standards Board," said the plan. However, the SEC stopped short of saying that it would adopt IFRS.
The SEC also intends to foster high-quality audits through oversight of the accounting profession via the Public Company Accounting Oversight Board. "The SEC will continue to oversee the PCAOB and its regulation of the accounting profession through the PCAOB's inspection and disciplinary programs," said the SEC. "The SEC also will work closely with the PCAOB on the promulgation and interpretation of auditing standards to address current issues in the capital markets."
Other goals include enhanced regulatory oversight of investment advisors to avoid problems such as the Madoff debacle and other fallout from the financial crisis. The SEC said that it would conduct a "top-to-bottom review of the effectiveness of its examination process." The agency's performance came under recent fire in a report from Inspector General H. David Kotz for failing to flag Madoff's $65 billion Ponzi scheme despite receiving complaints that dated back to 1992.
In addition, the SEC intends to seek legislation to establish a whistleblower program with compensation for those whistleblowers who provide productive tips, as is currently the case only with whistleblowers who alert it to insider trading matters.
