Chief financial officers, controllers, and finance professionals are being pressed to predict — and respond to predictions from their CEOs, chief economists, treasurers, board members and others — what the likely impact will be of regulatory rollback initiatives and other actions being taken by President Donald Trump’s administration. Such considerations are relevant to running the business and in developing required disclosures of risks and uncertainties.
Executive order impacts regulation
Among the dozen Executive Orders issued to date is the Jan. 30 Presidential Executive Order on Reducing Regulation and Controlling Regulatory Costs. This is the order which stated [emphasis added]:
- [I]t is essential to manage the costs associated with the governmental imposition of private expenditures required to comply with federal regulations.
- Toward that end, it is important that for every one new regulation issued, at least two prior regulations be identified for elimination, and that the cost of planned regulations be prudently managed and controlled through a budgeting process.
Additional stipulations of the Executive Order include [emphasis added]:
- The heads of all agencies are directed that the total incremental cost of all new regulations, including repealed regulations, to be finalized this year shall be no greater than zero, unless otherwise required by law or consistent with advice provided in writing by the Director of the Office of Management and Budget (Director).
- The [OMB] Director shall provide the heads of agencies with guidance … address[ing], among other things, processes for standardizing the measurement and estimation of regulatory costs…and emergencies and other circumstances that might justify individual waivers of the requirements of this section.
Earlier this week, the Washington Post’s Juliet Eilperen reported that “(a)fter just a few weeks in office, the new administration is targeting dozens of Obama-era policies, using both legislative and executive tactics. The fallout is already rippling across the federal bureaucracy and throughout the U.S. economy, affecting how dentists dispose of mercury fillings, how schools meet the needs of poor and disabled students, and whether companies reject mineral purchases that fuel one of the world’s bloodiest conflicts.”
The latter point in the list above relates to a Securities and Exchange Commission rule on conflict minerals reporting, promulgated under the Dodd-Frank Act, which is among the regulatory rollbacks anticipated under the Trump administration, as reported by Reuters’ Sarah Lynch and Emily Stephenson, and in an earlier Reuters’ story titled “Acting SEC chair seeks to scale back ‘conflict minerals’ rule.”
Duke Law School Professor James Cox also weighed in with his thoughts. Cox, an expert on the SEC and a former member of the Public Company Accounting Oversight Board’s Standing Advisory Group, observes, “There’s a lot of pressure on the SEC to have scaled disclosure so that the really big companies that are more complex will have more disclosure and the smaller companies for which the cost of disclosure is more significant, will have less disclosure. So what is more, what is less and where do you draw that line? These are things that are waiting for the new SEC chairman to set the tone and go forward.
“I say this as somebody who’s very favorably inclined toward mandatory disclosure and regulation of capital markets,” Cox continued. “But even I believe there’s been regulatory bloat that’s occurred.”
Less than a month into the new administration, a record number of resolutions have been made under the Congressional Review Act, as shown in the chart below from the Washington Post (citing data from the Congressional Research Service).
To be sure, controllers and finance officers are not only concerned about the impact of regulation on SEC reporting requirements, but other regulations, including the fate of the Affordable Care Act, the DOL’s overhaul of overtime rules (see “Federal judge puts DOL overtime rule on hold”) and tax reform (see: AICPA CEO Melancon anticipates major tax reforms)
All in all, what is the likely economic impact of these new initiatives? The Federal Reserve Board chair’s recent testimony is outlined in “Yellen: Too early to know how Trump will shape the economy. Separately, the Financial Times reported, “IMF head: Trump good for U.S. economy for now as trouble looms.”
Regulatory, economic update on March 30
The first 100 days of a Presidency is looked upon as a gauge of the nature and sense of urgency behind a new administration’s initiatives and a signal of what’s to come.
The Business Learning Institute is kicking off the 2017 Controllership and Financial Professional Series on March 30 with a Regulatory and Economic Update. The three-part series, offered in-person or via simulcast, covers regulation, business concepts and practices, and leadership skills:
- March 30: Regulatory and Economic Update
- April 27: Key Business Concepts and Best Practices
- June 1: Leadership Skills for the Accounting and Financial Professional
The series is led by Frank Ryan, CPA, CGMA, MBA, one of BLI’s most popular instructors who brings an exuberance, attitude and experience from his consultancy specializing in turnarounds, workouts, crisis management, strategic planning and service as a Marine Reserve Colonel, earning three Legions of Merit, the Bronze Star Medal, the Defense Meritorious Service Medal, the Navy Commendation Medal and the U.S. Army Commendation Medal. Ryan is a multi-year recipient of the AICPA Outstanding Discussion Leader Award.
Each program in BLI’s Controller and Financial Professional Series offers up to 8 hours of CPE. Register to attend in-person at The Loyola Graduate Center in Timonium, Md., or attend virtually via the simulcast. MACPA members save $100 on each of the three courses.Why not invest the $300 difference in MACPA membership and receive valuable membership benefits, including complementary CPE worth the cost of your membership! Benefit your career through networking with your peers, potential clients and employers, engage in dialogue with expert thought leaders, join with leaders in the profession, advocate at the state and federal level, and help shape the future of the profession.