SEC, PCAOB News Roundup

Feb. 1, 2010 - Feb. 17, 2010

FEI Summary

Following are selected highlights of new documents issued by, and other developments taking place at, the U.S. Securities and Exchange Commission and the Public Company Accounting Oversight Board for the period  Feb. 1, 2010 - Feb. 17, 2010 (and some earlier items provided as a reminder.) Highlights are also included from time to time from the International Auditing and Assurance Standards Board, its affiliate the International Federation of Accountants, and other international auditing standards organizations. Complete details can be found at www.sec.gov, www.pcaobus.org, and www.ifac/org/iaasb. 

SEC Updates Compliance & Disclosure Interpretations
On Feb. 16, 2010 the SEC's Division of Corporation Finance published some new Questions & Answers under its Compliance and Disclosure Interpretations (C&DIs) series. Following are the most recent updates made to the C&DIs:

·         Feb. 16, 2010: Reg S-K Sections 116, 117, 119; Form 8-K, Section 121A

·         Jan. 20, 2010: Reg S-K Sections 116, 117, 119, 128A, 133; Proxy Disclosure Enhancements

·         Jan. 15, 2010: Non-GAAP Financial Measures (same link as above, January 2010 updates)

·         Dec. 22, 2009: Proxy Disclosure Enhancements Transition

Read more in this FEI Summary.

SEC Chairman, Chief Accountant, Others Provide Highlights at PLI SEC Speaks
On Feb. 5, 2010, SEC Chairman Mary L. Schapiro, Chief Accountant Jim Kroeker, and others from the SEC provided updates at the Practicing Law Institute's annual "The SEC Speaks Conference."

Regarding the status of the SEC's proposed 'IFRS Roadmap,' Kroker said the SEC staff is currently developing a 'workplan' to address structural and transitional issues identified in comment letters. He also noted that, as the SEC continues to focus on the objective [presumably the objective of a single set of global accounting standards], it will be with an eye toward "mak[ing] sure it is in the best interests of the capital markets and investors."

Also speaking at the conference, Jeff Minton, Chief Counsel in the Office of the Chief Accountant, reviewed some auditor independence issues the SEC is seeing, and made some brief references to the Textron case (which indirectly relates to matters of 'cooperation' discussed under the separate Enforcement panel), including a reference to amicus briefs filed by the American Bar Association and FEI.

Other hot topics include disclosures relating to currency valuation issues in Venezuela, discussed by Division of Corporation Finance Chief Accountant Wayne Carnall, and an interesting question was posted by former Commissioner Cynthia Glassman as to whether the SEC 'backtested' fair values. Read more in this FEI Summary.

SEC Publishes Interpretive Release On Climate Change Disclosures
On Feb. 2, 2010 the SEC published its Interpretive Release.  "Commission Guidance Regarding Disclosure Related to Climate Change." See the SEC's press release  issued on Jan. 27 when the Commission voted 3-2 to release the guidance; and see this FEI Summary of the Jan. 27 Open Commission meeting.

In other action at its Jan. 27 open commission meeting, the SEC approved new rules governing money market funds. SEC press release.

Statement From SEC Chairman On Proposed Budget 
On Feb. 1, 2010 SEC Chairman Mary L. Schapiro issued this statement regarding President Barack Obama's FY 2011 budget request of $1.258 billion for the SEC, which represents a 12 percent increase over its FY 2010 budget: "If enacted, the President's request will do a great deal to help us keep pace with the continuing growth of the markets and provide necessary resources to support important regulatory initiatives in 2011."

SEC Investor Advisory Committee To Meet Feb. 22
On Feb. 1, 2010 the SEC published a Notice announcing that the next meeting of its Investor Advisory Committee will take place on February 22. According to the Notice, the agenda for the IAC meeting will include: 

• consideration of a Committee recusal policy;
• report from the Education Subcommittee, including a presentation on the National Financial Capability Survey;
• report from the Investor as Purchaser Subcommittee, including a discussion of fiduciary duty and mandatory arbitration;
• report from the Investor as Owner Subcommittee, including recommendations for the Committee on Regulation FD and proxy voting transparency, as well as reports on a work plan for environmental, social, and governance disclosure and on financial reform legislation; and
• discussion of next steps and closing comments.

 Written statements on the matters above may be submitted by Feb. 16, 2010 as detailed in the Notice.

SEC, UK FSA Hold Fifth Meeting In Strategic Dialogue
On Feb. 1, 2010 the SEC and the UK Financial Services Authority (FSA) held the fifth in a series of meetings as part of its ongoing strategic dialogue. Some of the areas discussed at the February 1 meeting included: 

• Corporate governance and executive compensation
• Disclosure regimes around client asset risk
• Regulation of hedge funds and investment advisers and the protection of customer assets
• Market infrastructure, particularly relating to central counterparties for OTC derivatives
• Market supervision
• Cooperation on cross-border supervision

The SEC-UK FSA meeting also provided the opportunity for the SEC and the FSA to continue discussions in the areas of corporate governance, particularly board risk oversight, and executive compensation. Consistent with the emerging international consensus, both agencies' current efforts seek to address, among other things, the intrinsic links between the types and degree of risk a regulated entity/registrant assumes and their corporate governance and compensation policies.

To facilitate the expanding cooperation between the SEC and the UK FSA, the two agencies agreed to review the existing Memorandum of Understanding Concerning Consultation, Cooperation and the Exchange of Information Related to the Supervision of Financial Services Firms and Market Oversight, entered into by the SEC and the FSA in 2006. This memorandum of understanding is designed to promote the coordination of robust and sound supervision of cross-border financial institutions and markets.  Read more in this SEC press release.

Prepared Feb. 17, 2010 by Edith Orenstein, director, Accounting Policy Analysis & Communications, Financial Executives International. This summary does not reflect FEI opinion unless specifically noted above