Complexity in Financial Reporting
Friday, June 9, 2006
Senior level staff at the Securities and Exchange Commission (SEC) and FASB have expressed concerns about complexity issues related to financial reporting. Both the SEC and FASB support the concept of moving towards a simplified, more transparent, "principles-based" system to govern financial reporting instead of the current "rule-based' system that results in overly complex requirements. Senior level staff at the SEC and FASB recommends a formation of a senior level panel or commission of experts to oversee a project related to the complexity concept. The suggested timeframe for such a project would be 18-24 months for recommendations and implementation plans for recommendations would follow based on constituents' reception of recommendations. Comments made by Robert Herz, Chairman at the FASB, and Scott Taub, Acting Chief Accountant at the SEC (title during time of presentation) about this issue at the 25th annual SEC and Financial Reporting Institute Conference at the University of Southern California can be found below.