During an office Christmas party many years ago, I, fortified by several, ahem, “adult” beverages, questioned the owner/president of our company about the job duties of a certain executive, who in my humble opinion, was obscenely overpaid in relation to the amount of work he performed.
He assured me that the man in question’s claim to fame was that he had successfully “straightened out” our Chicago office during a downturn in the company fortunes.
Since I knew that “straightened out” was a cryptic synonym for letting people go, I shrugged and said, “All he did was fire some people. Hell, I could have done that.”
Needless to say, for the ensuing 12 years I worked there, he and I never exchanged holiday cards. But then again, I knew I was right in my assessment.
When someone is at a higher level than me (read: higher paid and a bigger title), I expect them to either teach me something, or accomplish something that I can’t.
Which is why I was a bit surprised and a tad disappointed with last week’s release of the SEC’s report from its committee to improve financial reporting.
To be sure, the committee put forth some solid recommendations, but in truth, none that I hadn’t heard before. And since I’ve been covering this profession for less than a decade, that’s not what I would define as a deep drill-down.
Included among the committee’s proposals are putting executive summaries at the beginning of annual and quarterly financial reports, a concept on which someone wrote an opinion piece in our publication nearly five years ago. It also called for an increase in investor representatives on the Financial Accounting Standards Board and the Financial Accounting Foundation, again, a proposal that you can almost carbon date.
The committee also proposes redesigning accounting standards to make them more understandable. But if the convergence of U.S. GAAP and IFRS does not happen over the next several years (I personally believe it will take a bit longer than that), FASB and the SEC should consider a “systematic rethinking” of U.S. GAAP.
That in itself should be enough to frighten any mortal CPA.
Also thrown into the mix was the creation of something called a Financial Reporting Forum, which would ostensibly coordinate the efforts of FASB with the SEC, the Public Company Accounting Oversight Board, investors, auditors and other parties.
All of you in favor of adding another body to accounting and financial reporting please raise your hands.
To be fair, the committee’s points certainly have merit, even if they’re not exactly groundbreaking in their scope and research. But I’m sure any CPA in a firm of over 10 people could have tossed out many of the same ideas.
Now comes the tougher part — adoption.
I’m sure not many of you need a committee to explain the historical gap (pardon the pun) in the profession between proposals and implementation.
