The other day I received the annual report from a large insurance concern on their variable universal life products.

I’m sure most of you know what a VUL is and how they work, but how many of you have ever seen one of their annual reports, which weigh in at roughly the size of a Harry Potter novel?

The indices alone was close to 10 pages and not surprisingly, wasn’t nearly as interesting or fun to read as Harry Potter and the Prisoner of Azkaban.

In full disclosure, it was a lot harder to understand.

Now, I seriously doubt that a VUL annual report similar to mine served as the genesis for the Securities and Exchange Commission to form the Committee on Improvements to Financial Reporting and charge it with strategies to “reduce complexity and all its costly burdens.”

That’s been on investors’ wish lists for quite some time.

The SEC gave the CIFR until next August to divine simpler financial reporting standards (read: less specific and more principles-based.)

The committee, comprises financial and standard-setting heavyweights such as Robert C. Pozen, chairman of MFS Investment Management, former Financial Accounting Standards Board chairman Dennis Beresford, former Federal Reserve Board governor Susan Bies, former Deloitte & Touche chief executive officer James. H. Quigley, and CFA Institute president and chief executive Jeffrey J. Diermeier among others, will try and remedy the impact of the current state of complex, rules-based accounting. And also the relationship between complex financial reporting standards and restatements.

Pozen, the CIFR chairman has urged the cadre to put forth a series of recommendations that would not need legislation to put into effect. A wise edict.

Trust me, that would take considerably more than the one-year time frame given to the group.
As Will Rogers once said, if we were serious about slowing down the aging process all we would have to do is to work it through Congress.

But I digress.

Their job won’t end at written standards either.

Like everything else in the 21st century, they’ll also look at new available technologies such the SEC-approved XBRL taxonomies and interactive data and the ways that those can potentially alleviate roadblocks with regard to reporting transparency.

I’ll offer up my VUL annual report to the committee as Exhibit A.

That should keep them occupied at least until January.


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