Corporate Governance

The House Passes HR 2664

By Tamar Weinrib

The House passed HR 2664, which requires the Chairs of the PCAOB, the SEC, and the FASB to testify annually before Congress on accounting and auditing issues, beginning this year.  The goal of HR 2664 is to assist Congress in its quest to substantially decrease the complexity and costs of financial reporting and to increase transparency for investors. Lack of transparency has been commonly believed to have contributed to the current economic crisis by clouding investors' decisions. Increased transparency will strengthen investor confidence, which is a necessary precursor to any economic recovery.  The bill specifically mandates the SEC, FASB and the PCAOB to annually provide oral testimony to Congress on 1) their efforts to reduce the complexity of financial reporting in order to provide more accurate and clear financial information to investors; 2) the reassessment of complex and outdated accounting standards; and 3) how to improve the clarity, consistency, and overall accessibility of the existing accounting and auditing literature. The idea is not only to encourage "standard setters" to zealously improve transparency and reduce complexity in financial reporting but to also help Congress maintain some oversight of accounting and auditing standards. 

Full post as published by PomTalk on September 14, 2009 (boomark / email).