In a recent address, SEC Chair Mary Jo White stated that the SEC had focused its reinvigorated investigation and enforcement efforts on holding preparers and auditors accountable for their work on financial statements. She alerted the 2015 American Institute of Certified Public Accountants (“AICPA”) National Conference to the weighty responsibilities and challenges faced by auditors and preparers, as well as audit committee members, standard setters and regulators, when endeavoring to ensure high-quality, reliable financial reporting.

Preparers: As the “lynchpin of high-quality, reliable financial reporting,” preparers must challenge management concerning transactions, judgments and risk areas. They must also ensure effective internal control over financial reporting (“ICFR”), which helps assure GAAP-compliant financial statements. In addition, preparers must challenge CFOs, investor relations teams, and finance and legal teams when they choose non-GAAP measures, and scrutinize whether they still conform to disclosure and accounting rules.

Auditors: She gave credit to the PCAOB’s inspection program for the reduction of restatements of financial statements since SOX was implemented. Nevertheless, recent civil enforcement cases and PCAOB inspections show that companies and their auditors too often inadequately assess and respond to the risks of material misstatements, and miss or ignore red flags.

Audit Committees: Audit committee members have an increasing workload: they must not only balance listing requirements and SEC rules, but also oversee risks like cybersecurity. Because their expanding obligations may distract them from their core responsibilities, companies must choose directors who have specialized expertise (not just financial literacy) and who have the time to focus on their obligations. In particular, White warned that directors should not serve on so many boards that they cannot do their jobs effectively.

Standard Setters: White credited the Financial Accounting Standards Board (“FASB”) for establishing and improving accounting standards in the private sector. She praised the FASB and the International Accounting Standards Board (“IASB”)’s collaboration in creating streamlined globally accepted accounting standards. She also hinted that the SEC may make a further statement about its views on a single set of high-quality global accounting standards soon, since it had not done so since 2010. Staff, for example, could discuss the possibility of allowing domestic issuers to provide IFRS-based information as a supplement to GAAP financial statements without requiring actual reconciliation.

Regulators: Finally, White previewed an area of mutual interest for the SEC and the PCAOB—the SEC’s disclosure effectiveness initiative, which begins with a comprehensive review by the Division of Corporation Finance of the SEC’s disclosure regime, and in particular, Regulations S-K and S-X (pertaining to disclosure requirements and the format and content of financial reports). The SEC issued a request for comment on certain Regulation S-X requirements in September of 2015, and White anticipates a request for comment in the coming year on Regulation S-K.