Chamber Applauds SEC Advisory Committee on Recommendations for Improving U.S. Financial Reporting System

WASHINGTON, D.C.-The U.S. Chamber of Commerce today applauded the Securities and Exchange Commission (SEC) Advisory Committee on Improvements to Financial Reporting (CIFiR) for proposing their first series of recommendations aimed at reforming the U.S. accounting and auditing framework.

"Overly complex accounting rules undermine the efficiency of our capital markets by creating unnecessary costs and obstacles for investors, analysts and regulators," said Michael Ryan, senior vice president and executive director of the U.S. Chamber Center for Capital Markets Competitiveness. "These recommendations represent an important step in bringing our financial reporting system in line with the advancements in our global markets."

Included in the recommendations is a proposal that the SEC and Public Company Accounting Oversight Board (PCAOB) adopt guidelines for insulating professionals from liability when exercising appropriate judgment. This suggestion complements the move toward the use of International Financial Reporting Standards (IFRS) in the U.S. Using more principles-based international standards will require greater reliance on the professional judgment exercised by both preparers and auditors of financial statements.

Also proposed were several clarifications of the "materiality" standard used to gauge the accuracy of company filings. Far too often, errors that are deemed material by the SEC would not be characterized as such by investors. "Many company restatements are accompanied with an explanation that the market views as being an accounting issue and not something that really impacts the business," said Ryan.

The proposal also includes several themes which focus on issues such as reducing complexity in standards and increasing the investor perspective in the U.S. financial reporting system. The Committee will be making final edits to the draft proposal and posting it to the SEC website for public comment within the next few days. The final recommendations of the Committee are to be released this August.

The U.S. Chamber of Commerce is the world's largest business federation representing more than 3 million businesses and organizations of every size, sector, and region.

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