The Securities and Exchange Commission has begun asking for comments on a document that outlines a variety of proposed changes in the way companies do their financial reporting.

The SEC’s Advisory Committee on Improvements to Financial Reporting is soliciting public comments on a discussion paper prepared by committee chair Robert Pozen for a hearing earlier this month. The committee was established in July with the goal of providing recommendations for how to reduce complexity in the U.S. financial reporting system.

The committee is looking into issues such as the use of principles-based vs. rules-based standards; the inclusion within standards of exceptions, bright lines and safe harbors; and processes for providing timely guidance on implementation issues.

The committee is also examining whether the current financial reporting standards result in useful information for investors, or if the costs outweigh the resulting benefits. Unnecessary complexity can be harmful to investors by reducing transparency and increasing the cost of preparing financial reports, a committee staffer noted.

A copy of the discussion paper is available at http://www.sec.gov/rules/other/2007/33-8836.pdf.

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