A Chance to Get Up Close and Personal
Each year, the AICPA sponsors its National Conference on SEC Developments, where SEC staff are available to discuss current accounting and auditing issues with interested professionals. The conference, which most recently drew almost 2,000 attendees to Washington, D.C., December 7-8, 1999, has become the AICPA's single largest regular conference.
Although a wide variety of topics were discussed at the most recent conference, a common thread running through many presentations was the need for transparent, high-quality financial reporting, especially in the area of revenue recognition. The SEC's concerns about earnings management, fraud, and independence issues were discussed by the speakers, which;included SEC Commissioner Isaac C. Hunt, SEC Chief Accountant Lynn E. Turner, and Division of Enforcement Director Richard H. Walker. Although these and other speakers made the SEC's concerns clear, the tone was cooperative rather than confrontational, perhaps indicating that the SEC feels the profession is responding to its concerns.
The National Conference on SEC Developments is sponsored by the AICPA each December. The program provides a forum for auditors and registrants to discuss accounting and auditing issues and to interact with SEC staff. The 27th annual conference, which drew almost 2,000 attendees, was held December 7-8, 1999, in Washington D.C. Due to its growing populaty, the program was simulcast to several locations in Washington, New York, Toronto, and London, and it has become the AICPA's single largest annual conference.
SEC Commissioner Isaac C. Hunt gave the opening address; presentations followed by SEC Chief Accountant Lynn E. Turner, other SEC staff members, FASB officials, representatives of the AICPA senior technical committees, and other professionals, along with several question-and-answer sessions. Although a wide variety of topics were discussed, a common thread running through many presentations was the need for more transparent, high quality financial reporting, especially in the area of revenue recognition. Earnings management concerns still predominate staff attention, but, in general, there was a more cooperative tone from the staff and less confrontation than has been evident in recent years. The full text of many of the speeches is available from the SEC website (www.sec.gov).
Commissioner Hunt reminded his audience that accounting professionals bear a heavy burden in assuring investor confidence, preventing financial fraud, and generally supporting a fair and efficient marketplace. While he believes our capital markets are some of the most liquid in the world, he remains concerned about the reliability and integrity of financial statements filed with the SEC, especially revenue recognition abuse. Several of his remarks focused on two recently issued staff accounting bulletins: SAB 100, Restructuring and Impairment Charges, and SAB 101, Revenue Recognition in Financial Statements. He urged attendees to go beyond mere adoption of the guidance in the SABs and step up their practices by increased attention to internal controls. This renewed focus on internal controls will assure compliance with both GAAP and the Foreign Corrupt Practices Act and protect against unscrupulous employees, detect problems before they can cause harm, and prevent misleading financial statements. Effective internal control is contingent upon many elements, including support at the top of the organization, effective structure commensurate with the risks of the organization, effective delegation, periodic monitoring, and enforcement.
High Quality Audits
SEC Chief Accountant Lynn E. Turner stressed the importance of high quality audits "because it is the auditor-not the attorney, not the underwriter-to whom the public looks to assure the credibility of the financial statements that …