The Securities and Exchange Commission's Advisory Committee on Improvements to Financial Reporting has released a progress report on its work to date.
The key themes include placing greater emphasis on the investor perspective in the financial reporting system, and consolidating the process of setting and interpreting accounting standards. The committee wants to promote the design of more uniform and principles-based accounting standards and create a disciplined framework for the increased use of professional judgment. The committee is also in favor of coordinating U.S. generally accepted accounting principles with International Financial Reporting Standards.
In addition, the committee wants the SEC to clarify legal issues related to the use of company Web sites to provide useful information to certain types of investors. It also proposes a gradual phase-in of the use of Extensible Business Reporting Language for interactive data-tagging technology.
"A phase-in approach would allow for enhanced understanding of the technology, proven use of the XBRL U.S. GAAP taxonomy, and further development of tagging and rendering software," said the report.
The committee has also suggested changes in the ways standards are set by the Financial Accounting Standards Board. It proposes that FASB should set priorities based on consultation with an Agenda Advisory Group, which would include representatives of the SEC and the Public Company Accounting Oversight Board, as well as representatives from the investor, preparer and auditor communities.
The committee was established last July and its report has been eagerly anticipated. "This is an important step toward making financial information more useful for investors and reducing unnecessary complexity," said SEC Chairman Christopher Cox (pictured) in a statement.
He has asked the SEC's professional staff to analyze the report and its proposals, and to provide recommendations to the SEC for possible consideration later this year. The committee will continue its work over the next few months and is expected to issue additional proposals.
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