This week marks the third anniversary of the Pozen Committee's report, released under the SEC's then Chairman Cox as a way to reduce complexity and provide investors with more useful information.
Leave it to our friend, singer/songwriter and chief blogger at FEI, Edith Orenstein, to give us another fun song about financial accounting.
Here is Edith's perspective, “Hey There Bob Pozen,” sung to the Plain White T's tune “Hey There Delilah” and featuring the Singing CPA, Steve Zelin. It is really a tribute of sorts as she ends her blog post with a special thanks to Bob and members of the committee.
The scary part for me is how much has transpired since the Pozen Committee — health care reform, Dodd-Frank, FASB codification, the ongoing IFRS debate, IASB-FASB convergence. It is so easy to lose our bearing and forget some of these major issues affecting our profession. It is good to be reminded from time to time.
Edith covers the numerous policies and practices that have been implemented or influenced by this report at the SEC, FASB and PCAOB levels. She also makes the point that there are continued calls for reducing complexity in financial reporting, as PWC recently wrote in its “point of view”:
“Accounting and financial reporting complexity continues to increase, presenting challenges for investors, preparers and auditors. While some complexity is necessary, complicated scope provisions, exceptions to general principles, and overly detailed guidance often make standards difficult to understand, interpret, and apply. New standards continue to be issued, further adding to complexity.”
So, The Big Four and large public companies think financial accounting standards are overly complex (and so did Bob Pozen and his committee)?
What about the 29 million small businesses and their auditors?
This is exactly why we at the MACPA think the time is now for the FAF to act on the recommendations from its Blue Ribbon Panel on Private Company Standard Setting. Thirty-plus years of studying the different needs of private companies, with essentially the same answer: Their needs are different than public companies, and we have a legitimate answer from FAF that we call distinct but linked.
The recommendation is a seperate board but differential standards under the same GAAP codification that FASB created effective July 1, 2009. Our Accounting Standards Task Force had recommendations but overwhelmingly supported the BRP recommendations. Here is a copy of our letter to FAF and our Accounting Standards Task Force report and recommendation. We are urging our members to write FAF now if they want to make sure their views are heard. We think this is once in a lifetime to get this changed.
I hope you remember our first venture into music videos with Edith when we produced the hit, “If I Were an Auditor,” featuring the Edith/Steve songwriter/singer duo.
Maybe Edith and Steve's next tribute will be to the FAF Blue Ribbon Panel?
Until then, Edith, thanks for the fun reminder and thanks to you, Bob Pozen, and your committee.