On July 31, Securities and Exchange Commission Chairman Christopher Cox announced the appointment of the members of the 17-person SEC Advisory Committee on Improvements to Financial Reporting. The committee was established last month and held its first meeting on August 2. The SEC announced that the “committee will examine the U.S. financial reporting system and provide recommendations about how to improve its usefulness for investors and reduce unnecessary complexity for U.S. companies,” and cited investor concerns about the difficulty of understanding issuer financial reports and the prevalence of restatements (almost 10 percent of U.S. issuers restated prior financial reports in 2006) as evidence of difficulties in complying with current financial reporting requirements.
As part of its consideration of these issues, the committee will explore ways to use interactive data and the XBRL computer language for financial reporting. The committee includes representatives from a number of professional constituencies, including securities lawyers, audit committee members, auditors, pension funds, mutual funds, credit rating agencies, and various sizes of public companies.