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SEC to Release Concept Statement Allowing US Issuers to Use IFRS

At an open meeting today, the SEC voted to allow the publication of a concept statement that would allow US issuers choose from US GAAP or International Financial Reporting Standards.

SEC Approves PCAOB Auditing Standard No. 5

In an open meeting today, the SEC approved the PCAOB’s Auditing Standard No. 5 which replaces the infamous AS/2.  More details as they become available.

SEC Suspends Terrorist Sponsor Tool

SEC Chairman Cox announced that the SEC has temporarily suspended access to its recently launched tool for verifying public companies that have investments in states known to finance terrorists.  As previously reported, the list had come under criticism from Congressman Barney Frank for its inclusion of several companies that should not have been on the list.  In suspending the tool, Mr. Cox noted:

To address these and related concerns, we are temporarily suspending the availability of the web tool while it undergoes reconstruction. We will work to improve the web tool so that it meets the various concerns that have been expressed. Alternatively, our staff is considering whether the use of interactive data tags applied by companies themselves could permit investors, analysts and others to easily discover this disclosure without need of an SEC-provided web tool at all. In the interim, the companies’ disclosure regarding their business contacts in the five nations will continue to be available through the SEC’s EDGAR database, and findable using our new full-text search capability.

The Commission staff will also consider whether to recommend a Concept Release on the question of how best to make public company disclosure of activities in terrorist states more accessible.

SEC Chairman Cox Calls For Stronger Governmental Accounting Standards Board (GASB)

In a speechbefore Town Hall of Los Angeles, SEC Chairman Christopher Cox spoke of the need to strengthen the independence of the Governmental Accounting Standards Board(GASB) and for more SEC power to police the municipal marketplace. Recently, the GASB has been under attack by constituents questioning its existence.  Recent abuses in the municipal bond markets has shown the need for greater disclosure requirements over these securities and their issuers.  Mr. Cox noted about the GASB and the SEC’s power over municipal bond issuers:

The importance of the complete independence of accounting standard setters from the entities whose financial statements they regulate is a central precept of well functioning capital markets. And the need for that independence is just as great in the municipal market as it is in the corporate market.

Adherence to the Governmental Accounting Standards Board’s standards by all issuers of municipal securities is just as important as adherence to the Financial Accounting Standards Board’s standards by all corporate issuers. But under current law, the Commission does not have the same authority to require the use of proper accounting standards by municipal issuers that it does for issuers of corporate securities.

SEC To Discuss Concept Release on Whether to Allow Registrants Choice of US GAAP or IFRS

On July 25, 2007, the SEC will discuss the possibility of issuing a proposal that would allow registrants the ability to choose from US GAAP or IFRS in submitting financial statements in filings with the agency. Recently, the SEC issued a proposal to eliminate the IFRS-to-US GAAP reconciliation for foreign issuers. The SEC will also discuss possible changes to rules regarding shareholder proposals.

Congressman Frank Raises Concerns About Securities and Exchange Commission’s Terrorist Related List

Barney Frank, Chairman of the House Financial Services Committee sent a letter to SEC Chairman Christopher Cox expressing concern over how the agencies’ list of public companies with investment in terrorist-financed states was compiled.  Specifically, Mr. Frank believes some of the companies included on the list have already divested investments in these countries or, in some cases such investments are not significant and therefore should not be included on the list. Mr. Frank called on Mr. Cox to reexamine the methodology used to develop the list. The SEC announced the creation of the list and related software tool to track public companies with investments in terrorist financed states on June 25, 2007. 

Sarbanes Oxley Anniversary Discussion Event

The Center for Audit Quality (CAQ) announced that it will hold an event marking the fifth anniversary of the passage of the Sarbanes-Oxley Act of 2002.  The event will be held at the National Press Club on Monday, July 30, 2007 at noon and include a panel discussion.  Expected participants include: Paul Sarbanes and Michael Oxley; current SEC Chairman Christopher Cox; former SEC Chairmen William Donaldson and Harvey Pitt; current PCAOB Chairman Mark Olson and former PCAOB Chairman William McDonough. 

Senate Committee Examines Cross Border Stock Exchange Mergers

A committee of the U.S. Senate Committee on Banking, Housing, and Urban Affairs held a hearing this morning: A Global View: Examining Cross-Border Exchange Mergers. The purpose of the hearing was to explore the recent cross-border securities exchange mergers and their impact on markets, investors and regulators. An archive of the hearings, as well as prepared testimony is available, here. Witnesses included representatives from the NYSE Euronext, NASDAQ, SEC and Harvard Law School. 

SEC Expands Voluntary xBRL Program to Mutual Funds

The SEC announced certain final amendments expanding its voluntary xBRL reporting program.  The Amendments allow mutual funds to submit supplemental tagged information within the risk/return section of their prospectusus. Previously, the voluntary program was limited to public companies and investment companies. Data submitted under the program is available via the SEC’s website, here.  The SEC has a number of initiatives focused on integrating interactive data into its regulatory regime aimed at providing investors with easier access to information.