The SEC has announced that Chief Accountant Jim Schnurr is retiring, and Interim Chief Accountant Wes Bricker has been named Chief Accountant, succeeding Schnurr. Given Chair Mary Jo White’s identification of disclosure reform as a priority, and in light of her announcement that she intends to step down as SEC Chair when President Obama leaves office, it will be interesting to see if disclosure rulemaking is finalized between now and January 2017.
SEC’s Investor Advisory Committee – and Disclosure Effectiveness Initiative
Yesterday, the SEC announced its Investor Advisory Committee (IAC) will meet on December 8, and among the items on its agenda will be an update on the Commission’s disclosure effectiveness initiative, including rulemaking and related studies. According to the agenda, the group will also discuss investor protection priorities for the new year, and the results of its election of new officers filling open positions.
The disclosure effectiveness initiative, launched by SEC Chair Mary Jo White, dates back to at least October 2013, when in a speech at an NACD conference, she said “the path to more optimal disclosure… is an important priority for me.” The Commission’s work continued apace, including a disclosure study published in 2015 in response to a requirement in the JOBS Act, and proposed rulemaking was published in July 2016 and August 2016, in part in response to a mandate included in the 2015 Fixing America’s Surface Transportation Act (FAST Act).
Changing of the Guard and impact on Rulemaking
In an article published earlier today in The Wall Street Journal, Financial Regulators Scramble to Complete Post-crisis rules, WSJ writer Andrew Ackerman describes the traditional ‘scramble’ to complete rulemaking-in-progress before a new administration takes office, in this case, with the election of Donald J. Trump as President.
Since SEC’s Bricker has been working in a key role as Interim Chief Accountant (CA) in light of a serious injury Schnurr suffered earlier this year. the changing of the guard in the Office of the Chief Accountant as Bricker shifts from Interim CA – to Chief Accountant – would presumably not seem likely to have as much of a potential impact on the speed or direction of rulemaking, as the upcoming change of SEC Chair and the addition of three new Commissioners when Chair White leaves. There are already two vacancies on the 5-member Commission, and similar to the appointment process for Supreme Court Justices, SEC Commissioners are appointed by the President, subject to Senate confirmation.
Substantive status updates on the disclosure effectiveness initiative, and other major initiatives at the SEC, are traditionally provided at the AICPA National Conference on Current SEC and PCAOB Developments, slated to take place this year on December 5-7, days ahead of the SEC IAC meeting.
What the New President Means for CPAs
Mark Peterson, Executive Vice President – Advocacy of the AICPA, will present an analysis of the results of the presidential and congressional elections, and what they mean for the CPA profession going forward, at the MACPA’s CPA Summit Conference, taking place on December 15 at the Johns Hopkins Applied Physics Lab in Laurel, MD, with certain sessions – including Peterson’s session, also available via simulcast.
The conference, focused on leadership, innovation and technology, will also feature a keynote from AICPA Chair Kimberly Ellison-Taylor. Learn more at macpa.org/cpasummit
Changes at FASB’s IAC
Earlier this month, the FASB announced changes in how its Investor Advisory Committee will operate. FASB’s IAC will focus “in two primary areas, including generalist issues (such as Disclosure Framework, Hedging, and other broad projects added to the future agenda) and emerging trends.”
According to a FASB spokesperson, the emphasis on ‘generalist issues’ is so that the IAC can focus its discussions, and provide input on, major projects that cover a wide range of industries, as opposed to narrow or industry-specific topics.
One issue that was a focus of the SEC’s Investor Advisory Committee was FASB’s materiality project, in which the FASB proposed to directly reference the Supreme Court definition of ‘materiality,’ vs. maintain a GAAP specific definition in FASB literature. Many viewed the definitions as being in sync, others did not, and issues were raised as to whether the definitions were consistently applied, too narrow or too vague, and the potential impact on, investors. SEC’s IAC sent a comment letter to the FASB in Oct. 2015, expressing concern about FASB’s materiality proposals.
We were curious if the FASB’s IAC had discussed the SEC IAC’s concerns on FASB’s materiality project.
According to a FASB spokesperson, related discussions were held during the closed meeting portion of a FASB IAC meeting, during discussion of FASB’s Disclosure Framework project. The IAC hasn’t met since then, according to the spokesperson, pending the recent review of the IAC and upcoming appointment of new IAC members.
The roundtable on materiality and certain other disclosure issues, originally slated to take place this month, has been moved to 1Q2017. According to the FASB spokesperson, “The FASB decided to delay the November roundtable until 1Q 2017 because the Board has not yet issued its Disclosure Framework (DF) proposal on inventory, which is expected to be out by the end of this year. The Board wanted to be able to consider feedback received on all DF-related projects together, so it made sense to delay the roundtable until comments had been received on inventory.”
See the related article by FASB Board Member Marc Siegel in FASB’s Third Quarter “For the Investor” newsletter: Disclosure Effectiveness: New Disclosures.
New FASB Board members
As we previously reported, Marsha Hunt and Harold Monk were recently appointed to the FASB board. It is too soon to tell what impact the new board members will have; both Hunt and Monk have been actively involved on key FASB advisory committees – the Financial Accounting Standards Advisory Committee and the Private Company Council, respectively. FASB Chair Russell Golden, reappointed to a second term as Chair, is also slated to provide an update at the December 5-7 AICPA conference.