SEC

SEC's stance on restatements raises brows

Jim Kim — Thu, 28 Aug 2008 21:04:27 -0400

The conventional wisdom seems to be that restatements stemming from material weaknesses have declined. That seems to be most true when it comes to big companies. You would have to think that Sarbanes-Oxley had something to do with that. Six years in, most companies have a better grip on their financials, but the law isn't the only factor. Financial Week reports that some critics say the SEC has taken a more lax view toward restatements. Chief accountant Wayne Carnall--who joined the SEC in 2007 after a stint in PricewaterhouseCoopers' national office--may bring more of an auditor's sympathies to the process. More companies seem to be asking advice and being told that they do not need to restate. It will be interesting to see how small companies are affected. You would expect a rise on restatements as the law takes hold. We'll see if that bump materializes.

For more:
- here's the article

PCAOB to host small issuer events

Jim Kim — Fri, 22 Aug 2008 11:52:49 -0400

As you may know, the PCAOB is reaching out to small companies with two events in October. One forum is set for Oct. 1, at the Sofitel Hotel in Chicago. The second is set for The Rittenhouse Hotel in Philadelphia on Oct. 30. West coasters and southerners may feel left out. Hopefully, there will be more. These events may or may not generate real news. Hopefully, transcripts and summaries will be made available to all. The board has just released an agenda, which includes staff from the SEC's Division of Corporate Finance speaking about common small issuers concerns, including implementation of the SEC's guidance for compliance with Section 404 of Sarbanes-Oxley. Also, the board will provide updates on various accounting and auditing issues, auditing standards-setting activities, and inspections activities. In addition, a panel will discuss what audit committees ought to know about the PCAOB.

For more:
- here's an item from accountingweb.com

Can you control for rumors in your firm?

Jim Kim — Wed, 13 Aug 2008 17:55:14 -0400

The time-honored practice of market chatter and gossip may pose as something of a regulatory issue for a lot of Wall Street firms, on the sell-side and the buy-side. The fear is that the SEC intends to hold more companies accountable for rumors designed to tank a stock. Subpoenas have been flying. And we've already seen one enforcement action against an alleged rumor-monger. The SEC is taking a look at policies that firms have in place regarding rumors. One consequence, as TheStreet.com notes, is that more firms are telling their analysts not to be so chatty with journalists. This of course is bad news for any reporter digging for information about companies. The buy-side was often a great source. We'll see if this blows over, but I think we may see more companies issue formal guidelines about information sharing with outsiders.

For more:
- here's the article from TheStreet.com

Critics of XBRL hoping for a delay

Jim Kim — Tue, 12 Aug 2008 09:45:32 -0400

Has the fact that small companies won a series of reprieves from compliance with 404(b) of Sarbanes-Oxley emboldened big companies facing an aggressive XBRL adoption mandate? Maybe. Big companies seem to be hoping that the SEC will heed their warnings and delay XBRL adoption for companies both big and small. Recall that the SEC laid out a schedule that would call for big companies to report results for a fiscal period ending in late 2008 in XBRL; small companies would follow a year later. CFO reports that big companies have filed comments suggesting that the timetable is too aggressive. While this is understandable, companies may be better off if they ramp up their XBRL efforts now. The last thing you want to do is risk noncompliance. Pfizer and Comcast, reports CFO, warn of tricky vendor issues. Bottom line: Counting on a delay is a poor solution.

For more:
- here's the article

SEC promotes web as financial info release medium

Jim Kim — Fri, 08 Aug 2008 14:43:33 -0400

The SEC has taken a keen interest in promoting new technologies as a way to distribute corporate financial information. The looming mandate for XBRL is an example. Similarly, the SEC just released guidance that encourages companies to use the web--their own sites or recognized third-party sites--as the sole means of releasing market-sensitive information. Financial Week notes that the news went over like a rock. There won't likely be any dramatic change. While the news makes some sense from a Reg FD standpoint, few companies will likely cease releasing news via press release distributors in favor their websites. There could be a period of confusion as investors face uncertainty in whether to look for 8-k disclosures for news or press release distributors, or website items. Companies will have to somehow make clear to investors and analysts how they intend to communicate.

For more:
- here's the Financial Week article

Related Article:
Time for an executive web posting policy?

XBRL standards body stokes worry

Jim Kim — Thu, 17 Jul 2008 08:40:17 -0400

Most people think XBRL is a pretty good idea. But not everyone thinks the tag standards should be set by XBRL US, a non-profit group comprising top accounting firms KPMG, PricewaterhouseCoopers, Ernst & Young, Deloitte & Touche and Grant Thornton. One fear, as noted by Financial Week, is that the standards organization will someday start selling more consulting services, which could create the impression of a conflict of interest. XBRL US says it will limit the services it offers and will not compete with its members. Another fear is that the powerhouse audit firms will be able to unduly affect the evolution of the data tags via XBRL US in ways that will benefit their consulting businesses. I do not think any of this is a showstopper. But XBRL US would be wise to take proactive steps to deal with any misunderstandings now. In May, the SEC proposed that large companies begin complying as early as 2009.

For more:
- here's the Financial Week article

Mortgage crisis to spawn even more Wall Street charges?

Jim Kim — Sat, 28 Jun 2008 13:33:36 -0400

Scandals always generate after-the-fact regulatory activity; Sarbanes-Oxley is just one of many examples. Now, as the great credit crunch continues to unfold, we are starting to see some interesting prosecutions--beyond the massive sweep that netted 400 charges against various low-level mortgage industry players. The charges against the two Bear Stearns hedge fund execs goes all the way back to ground zero of the crisis. The issue is whether the two execs misled investors into thinking the fund portfolio was just fine. One moved some money out of the fund, even as he was reassuring customers. In that vein, the state of Illinois has just sued troubled mortgage giant Countrywide and its CEO Angelo Mozilo. It's quite possible that the federal investigations going on--by the SEC and FBI--will lead to Sarbox charges against top executives. This is far from over.

For more:
- here's some background on Countrywide

Related Article:
Illinois to sue Countrywide; tip of iceberg?

Another Fair Fund distribution sent; more to come?

Jim Kim — Mon, 23 Jun 2008 08:49:13 -0400

Recall that the Sarbanes-Oxley Act gave the Securities and Exchange Commission the authority to distribute the fines it collects from law-breaking companies to aggrieved investors. Since then, nearly $4 billion has been distributed, stemming from cases involving MCI, Enron, Qwest and others. Dow Jones, via CNNMoney.com, reports that another distribution is now underway. The SEC has sent more than $103 million to 130,000 people and 380 mutual funds that lost money because of market timing and late trading by Banc of America Capital Management and its affiliates. This is the first of several that will ultimately reimburse more than 1.5 million investors and 525 funds. We may see more distributions from mutual fund abuse cases.

For more:
- here's the Dow Jones article

Related Article:
More fraud, smaller penalties

SEC moves ahead with XBRL

Tue, 27 May 2008 06:59:59 -0400

As expected, the Securities and Exchange Commission has announced that it will propose a rule that would require large firms (a public float of more than $5 billion) to use XBRL (extensible business reporting language) for fiscal periods. A year later, all public companies would be required to follow suit. This follows the SEC's vaunted three-year pilot program. The upside is that companies will have to make interactive financial reports, which have been talked about for so long, a reality. The devil will be in the details of the rule, of course. There is a tendency to expect too much of technology. Financial Week reports that some think that data tagging might have prevented the credit crunch. That's going a bit overboard. Every company will decide how much beyond the baseline they will tag. Chances are, the mindset will not change: They disclose the bare minimum as a protective measure.

For more:
- here's the article

ALSO NOTED: Deloitte's take on GRC software; Sarbanes laments SEC funding;

Tue, 20 May 2008 06:59:58 -0400

> Deloitte's take on GRC software. Article
> E&Y: Bribery on the rise. Article
> As in the US, UK whistleblowers face long road. Article
> Not over yet: David Welch case in court again. Article
> Compliance chiefs still being sought. Article
> One way to secure new devices Article
> Sarbanes laments SEC funding. Article
> Sarbox and SQL Server. Article

And finally ... Spreadsheet worst practices. Article