Fireside Chats, Enforcement This-N-Thats

The SEC Historical Society has scheduled a two-part program on accounting in its Fireside Chats series, which you can log into from in front of your fireplace - or wherever you happen to be - on Oct. 22 and Oct. 28 from 1-2 pm EDT. (Archived webcasts will be available as well.) This particular two-part series is sponsored by Deloitte.

Oct. 22: The Role of Professional Judgment in Accounting and Auditing
Moderator: Prof. Zoe-Vonna Palmrose, former Deputy Chief Accountant, SEC and currently Professor at Marshall School of Business, USC . Speakers: Robert J. Kueppers, Deputy CEO, Deloitte LLP, and Greg Jonas, formerly of Moody's and currently a member of the PCAOB Standing Advisory Group.

Oct. 28: Exploring Principles vs. Rules-Based Accounting and Auditing Standards
Moderator: Prof. Patricia Fairfield, McDonough School of Business, Georgetown University (and formerly an Academic Fellow at the SEC). Speakers: Robert J. Kueppers, Deputy CEO, Deloitte LLP, and Scott A. Taub, former Acting Chief Accountant and Deputy Chief Accountant, SEC and currently Managing Director, Financial Reporting Advisors LLC.

Both of the above topics are keenly of interest in a world that seems to be moving increasingly to IFRS (see our post yesterday on the G-20 call for convergence by June, 2011; see an alternative view on IFRS by Prof. Tom Selling in his blog, The Accounting Onion. Selling served as an Academic Fellow at the SEC in addition to his other experience.)

For further info on the SEC Fireside Chats, see the SEC Historical Society website, http://www.sechistorical.org/ Calendar.

SEC Inspector General Issues Reports on Enforcement Division, Inspections
Broc Romanek reports in TheCorporateCounsel.net blog this morning in a post entitled The Coming Overhaul of SEC's Enforcement Division that the SEC's Office of Inspector General issued 2 new reports listing 21 recommendations for improving the Division of Enforcement (OIG Report No. 467), and 37 recommendations for improving the Office of Compliance Inspections & Exams (OIG Report No. 468), respectively.

In addition to some recommendations previously reported when the OIG released its report at the end of August on the SEC's handling of the Madoff affair, (as previously reported, see also SEC's Post-Madoff Reforms), one of the things I found particularly interesting in current (Sept. 29) OIG report on Enforcement (I remind you of the disclaimer posted on the right side of our blog at http://www.financialexecutives.blogspot.com/ ) is the reference to 'poaching' on printed pg. 27 (pdf pg. 26) of the report, in which a staff member noted (in response to OIG survey of the Enforcement Division):

Dealing with other enforcement groups is often a hassle, because every office is primarily motivated to guard their own territory and make sure the other office isn't trying to poach the good cases. That said, informal, relationship based contacts with staff in other offices about particular matters is frequently helpful and rewarding. Sometimes I am discouraged from working with other groups because it is viewed as relinquishing control of "our case.”

I imagine the comment on 'poaching' good cases is not unique to the SEC or the government, as I assume prosecutors at various levels in government, and attorneys in private practice, may experience the above sentiment as well. And, even outside of the field of law, breaking down silos and working together for the common good can be a reality of organizational life for any organization; nonetheless I found the comment particularly interesting, in addition to the other subject matter relating to how cases and tips are handled and the OIG's recommendations thereto.

SEC Enforcement Director Robert Khuzami, in the Management Comments (response to OIG recommendations) included in the report, noted: "We concur in all of the recommendations in the report. In fact, Enforcement Division has already taken significant steps toward creating a better organized and effective division" (Read the complete Management Comments in Appendix IV of the report, and OIG response to Management Comments in Appendix V, for details.)

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G-20 Progress Report - More Detailed than Leaders' Statement - Calls For Convergence by June, 2011

Updating our earlier post from this weekend on the Sept. 25 G-20 Leaders' Statement (which called somewhat generically for convergence by June, 2011), we believe our original interpretation posted on Sept. 26 (i.e. that the G-20 is calling for completion of major convergence projects - such as the FASB-IASB MOU - by June, 2011) was correct, because of wording posted subsequently by the G-20 in an updated Progress Report as detailed below.

Compare the wording in Item 87 of the Progress Report on the Actions of the London and Washington G20 Summits - 5 Septmeber 2009, which states: "Accounting standard setters should take action to make significant progress towards a single set of high quality global accounting standards by the end of 2009," - to the wording in Item 53 in the Progress Report on the Actions to Promote Financial Regulatory Reform Issued by the U.S. Chair of the Pittsburgh G-20 Summit - 25 September 2009, which states: "We call on our international accounting bodies to redouble their efforts to achieve a single set of high quality, global accounting standards within the context of their independent standard setting process; and complete their convergence project by June 2011." (emphasis added)

The operative change in wording between the G-20's Sept. 5 Progress report with respect to convergence (generally), and the Sept. 25 Progress Report noted above, is that the G-20 has accelerated its call for global accounting standards convergence from a call for accounting bodies to "make significant progress ... by the end of 2009" to a call for them to "complete their convergence project by June 2011."

The G-20's Sept. 25 Progress Report discusses the matters of financial instruments, off-balance sheet items, provisioning (including loan loss provisions), valuation and impairment under separate items shown in the Progress report - Items 49, 50, 51 and 52 - for which the G-20's request of accounting standard-setters is still stated as requesting completion "by the end of 2009."

I'd like to emphasize this is my interpretation (and I remind you of the disclaimer posted on the right margin of our blog at http://financialexecutives.blogspot.com/).

Some other personal observations: The FASB-IASB MOU appears to have a generic date of 2011 as the goal for major convergence projects to be completed (without specifying a particular month in 2011) so some observers may interpret the G-20's Sept. 25 Progress Report as putting an earlier target completion date in 2011 (June, 2011) than others may have assumed the FASB-IASB MOU was aiming at (i.e., in theory, 2011 in the FASB-IASB MOU could have been interpreted by some to mean Dec. 31, 2011).

Is the June, 2011 target completion date for convergence being specified by the G-20 to provide more breathing room for the SEC to potentially reach a decision in 2011 on its IFRS Roadmap? The proposed IFRS Roadmap that was issued for public comment by the SEC last fall, as noted in SEC's Aug. 27, 2008 press release (the date the Commission voted in favor of issuing the proposed IFRS Roadmap for public comment) noted that under the proposal: "The Commission would make a decision in 2011 on whether adoption of IFRS is in the public interest and would benefit investors."

As we noted in an earlier post, various news sources have reported that in the Q&A session following her prepared remarks at Georgetown University on September 18, SEC Chairman Mary L. Schapiro indicated the SEC would formally revisit its proposed IFRS roadmap 'this fall.' More specifically, according to Sarah Lynch of Dow Jones Newswire, in her article, Schapiro Says SEC Will Discuss Transition to IFRS This Fall:

Schapiro signaled Friday [Sept. 18] the issue of switching from using U.S. generally accepted accounting principles to a global standard, however, is still very much on her agenda. "It would be ideal if we can have a single set of high-quality accounting standards that worked globally. The reason for that is it would allow for comparability for very large companies in particular and give investors the ability to make comparisons around the world," she said. "I expect we will speak a little later this fall about what our expectations are with respect to IFRS," she added.

I have reached out to various parties for comment/confirmation of my understanding of the various G-20 reports; while the information in the G-20 Leaders Statement was generic, the information in the Progress reports appears to be more specific. If I receive further information I will add it to this post or a subsequent post.

READ MORE - G-20 Progress Report - More Detailed than Leaders' Statement - Calls For Convergence by June, 2011