The Wall Street Journal-20080114-Changes in SEC Rules Advised
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Changes in SEC Rules Advised
WASHINGTON -- An advisory group to the Securities and Exchange Commission voted Friday to approve recommendations for wholesale changes in U.S. accounting and financial reporting.
Among the changes unanimously backed by the advisory panel: base U.S. accounting rules on transactions and activities to avoid special treatment for various industries, limit corporate financial restatements to meaningful mistakes, and provide more protections from lawsuits or SEC enforcement actions for companies and auditors exercising "reasonable" professional judgment.
The SEC advisory panel is slated to meet again in March and issue a final recommendation this summer.
Any move away from industry-specific accounting would be a big change likely to touch off controversy, according to MFS Investment Management Co. Chairman Robert Pozen, who heads the SEC advisory panel on improvements to financial reporting. Mr. Pozen predicted "all hell's going to break loose" once the group issues the recommendation, intended to reduce complexity and make corporate results more comparable from industry to industry.
Shielding companies and auditors from second-guessing or lawsuits when they exercise professional judgment is sure to be controversial as well.
