5 Recommendation , page 80, Final Report of the SEC Advisory Committee on Improvements to Financial. Reporting, August 1, Final Report May 30, · Press Release May 23, · FAF Annual Report April 16, · FASB Response to FAF Postimplementation Review Report. FASB permits new benchmark rate for hedge accounting Committee on Improvements to Financial Reporting (CIFiR), submitted its final report in August.
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The Committee recommended that companies provide better disclosure to investors about what portion of their earnings constitutes cash or accrued income based on historic cost accounting and what portion represents unrealized gains or flnalreport based on fair value estimates. On 14 May, the Commission formally proposed using new technology to get important information to investors faster, more reliably, and at a lower cost by requiring all US companies to provide financial information using interactive data beginning as early as next year.
They have committed to continue working together with the SEC to increase the usefulness of the financial reporting system. However, the Committee warned that the correction of every accounting error should not automatically result in a lengthy process of restating financial statements for several prior years.
The Committee says that others such as audit firms may still publish their views on accounting issues, but they should be labeled as non-authoritative.
Today, the chairman of the Advisory Committee, Robert C. Securities and Exchange Commission chairman Christopher Cox received the final report of an SEC advisory committee containing 25 recommendations to make financial information more useful and understandable to investors.
FASB Advisory Groups
Thus, the Committee says it believes that restatements of prior years should be undertaken for the correction of accounting errors that are material to current investors. For example, the Committee called for improved rules on off-balance sheet accounting and fewer situations where alternative accounting standards exist for the same transaction.
In this fourth area, the Committee also called for a clearer delineation of functions on interpreting accounting standards, with the FASB taking the lead on broad issues and the SEC on registrant-specific issues.
The Committee recommended a different approach to the substantive design of standards. In the fifth area, the Committee recommended increased correction of accounting errors and more disclosures about those corrections to investors.
The SEC already has finalrepotr steps to benefit investors based on two earlier recommendations made by the advisory committee. Among other things, the Committee noted in the first area that many individual investors find company filings with the SEC to be overly complex and detailed.
And on 30 July, the SEC approved new guidance to public companies to address their concerns about how to comply with the securities laws while developing their Web sites to serve as an effective means for disseminating important information to investors.
Cox asked the Advisory Committee for recommendations on reducing unnecessary complexity in the US financial reporting system and making financial reports clearer and more understandable to investors. In the third area, the Committee noted that the underlying objectives of certain accounting standards are sometimes obscured by dense language, detailed rules, and numerous exemptions.