Helping clients with financial reporting
With the Securities and Exchange Commission's new interpretative guidance on financial reporting that resulted in the wake of Sarbanes-Oxley, management should look to the SEC rather than auditing literature to help assure compliance with the law, said Zoe-Vonna Palmrose, deputy chief accountant for Professional Practice in the Office of the Chief Accountant at the SEC.*
Palmrose said the SEC's guidance was meant to ensure that companies have adequate internal controls, which provide reasonable assurance of the reliability of financial reporting. For some companies, this may mean an elimination of some costs, recordkeeping and reporting.
The new SEC guidance, according to Palmrose, means that management must make significant and appropriate judgment in designing and conducting an evaluation of financial recordkeeping and reporting. This can be done in a framework of three phases:
- Identifying the financial reporting risks and controls
- Evaluating evidence of operating effectiveness of internal control over financial reporting; and
- Reporting considerations, including effectiveness and possible deficiencies.
Palmrose’s comments were part of the program, "Reporting on Internal Control over Financial Reporting: How Has It Changed with the SEC's New Guidance and the PCAOB's New Standard?" which was sponsored by the Section of Business Law and the Center for CLE. In addition to Palmrose, the program featured Linda L. Griggs, partner in Morgan, Lewis & Bockius LLP, as moderator; and Daniel L. Goelzer, board member of the Public Company Accounting Oversight Board, and H. Stephen Meisel, assurance partner in PricewaterhouseCoopers LLP's National Professional Services Group.
Goelzer sounded several of the same themes as Palmrose when he mentioned that new standards and guidance allow for better focus by management, the elimination of certain kinds of recordkeeping and the scalable approach whereby the guidance is applicable to small businesses as well as large.*
Meisel offered his view of what the new changes have meant to companies to date, and Griggs presented tips for companies, both for accelerated filers and non-accelerated filers. A series of online resources was distributed as part of the program.
A portion of the materials from the program may be accessed, free of charge, at click here. The program, including printed materials, may be purchased through the ABA Web Store click here.
*Comments are the personal views of the speaker and not necessarily representative of the views of their employers.
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