SEC

Next XBRL Hurdle Approaches

May 22, 2012

Come June 15, as many as 7,000 non-accelerated filers will need to imbed all financial statements, including footnotes, with the XBRL interactive data tags. Plenty of companies are finding the undertaking to be daunting and a drain on resources. "It's like the days of Sarbanes-Oxley," says Ron Baden, chief customer officer at financial applications provider Host Analytics. "They're scared to death." Details inside.
 

With Deloitte Ensnared, China Localizes Audit Firms

May 16, 2012

China's Ministry of Finance recently announced a new policy that requires China's audit firms to increase their staffing of Chinese-trained and certified auditors so that no more than 20 percent of its partners are non-Chinese-certified accountants or auditors by 2017. A recent enforcement action against Deloitte is "more of a symptom than a cause" for the policy, says the general counsel of a U.S.-based audit firm.
 

Proxy Access Efforts Starting Slow

May 15, 2012

Efforts by shareholders to win the right to nominate board members directly haven't fared well so far this proxy season. Many companies successfully petitioned the SEC for permission to ignore proxy access proposals. Of 22 proposals, only three have gone to a vote and all of them lost. Still, shareholder activists say they aren't about to give up the fight. Details inside.
 

SEC Explores Option for 2-in-1 Filing Method

May 14, 2012

The SEC is considering a simplification to the financial report filing process by allowing companies to file under a single method, known as in-line XBRL, which allows companies to include XBRL tags on HTML documents. Currently, companies must file under the traditional HTML format and the XBRL format separately.
 

SEC Answers More JOBS Act Questions

May 09, 2012

The Securities and Exchange Commission issued another round of answers to "frequently asked questions," clearing up some of the ambiguity of what types of companies can qualify as "emerging growth companies," established by the JOBS Act. It also attempts to clear up questions about filing requirements for EGCs.
 

Compliance Rescues Morgan Stanley From FCPA Prosecution

May 08, 2012

Morgan Stanley was exonerated from Foreign Corrupt Practices Act violations last month, despite a guilty plea by one of its top executives. The Justice Department and the SEC are citing the bank's strong compliance program for why it declined to pursue charges. "Corporate America has been sent a clear message that those who try will be rewarded," says Roy Snell, CEO of the Society of Corporate Compliance and Ethics.
 

PCAOB Contemplates Its Next Move on Improving Audit Quality

May 08, 2012

The Public Company Accounting Oversight Board may be cooling on its idea of mandatory audit rotation, but don't expect it to walk away from the idea of putting new measures in place to improve audit quality, including strengthening the role of the audit committee. "We're all anxiously awaiting exactly what they'll decide to do," says James Comito, a shareholder at audit firm Mayer Hoffman McCann.
 

Recipe for Anti-Corruption Successes: Due Diligence, Diverse Messaging

May 08, 2012

Much goes into doing anti-corruption properly, but there are four broad categories that top companies focus on: assessing corruption risks, devising controls against them, implementing those controls and procedures with the local workforce, and then following up with constant monitoring. Inside, more lessons for building an effective anti-corruption program.
 

What's the Holdup With Dodd-Frank Rulemaking?

May 08, 2012

The Volcker rule is slated to go into effect this July. One problem: A final version of the rule still doesn't exist. In fact, many of the final Dodd-Frank Act rules still aren't written. So what's the holdup? One impediment is that regulators must do better cost-benefit analysis after a court ruling last year. "That's a huge undertaking, and it's going to slow things down," says Hal Scott, a professor at Harvard Law School.
 

SEC Looks for Consistent Story in Pension Disclosures

May 07, 2012

The Securities and Exchange Commission is concerned about how companies are describing their pension obligations when they accelerate the recognition of their losses under new accounting policies. The SEC's chief accountant recently said that in some cases companies are using non-GAAP methods of disclosure for pensions. Details inside.
 

How Not to Go Public

May 01, 2012

Online coupon purveyor Groupon got a rude awakening early in its public-company life: The Internet darling was forced to drastically revise down earnings and to admit to several internal control weaknesses. Shareholders quickly filed lawsuits. Such suits are likely to become more common now that the JOBS Act makes it easier for companies to go public without proper control systems. More inside.
 

COSO Framework Overhaul Sparking Deeper Debates

April 24, 2012

COSO's effort to update its famed, but 20-year-old, framework for managing internal controls has sparked a deeper debate this spring about how companies should approach internal control overall. "Some of COSO's own members are critical of the draft. It speaks to the fact that these organizations took their role seriously," says Norman Marks, vice president at SAP. A closer look is inside.
 

SEC Churns Out JOBS Act Guidance

April 24, 2012

Since the JOBS Act was signed into law early this month, the SEC has issued three separate sets of guidance and called for a round of comments. The swift action is surprising to some given the JOBS Act's not-so-investor-friendly reputation. "The SEC is known to dislike the JOBS Act, but this shows good sportsmanship by jumping in," says Andrew Fabens, partner at the law firm Gibson, Dunn & Crutcher.
 

The High Cost of FCPA Investigations

April 17, 2012

Forget about fines and penalties to settle a Foreign Corrupt Practices Act investigation; simply conducting one can run into the hundreds of millions of dollars. Just ask Avon: The cosmetics company has spent $249 million since 2009 to investigate charges of FCPA violations. Inside are more examples of those racking up massive FCPA costs and tips to hold down expenses.
 

SEC to Gather Preliminary Comments on JOBS Act

April 12, 2012

More JOBS Act news: The SEC also announced it is accepting a preliminary round of comments from the public to hear general views and concerns about the recently passed law. It's just the second time the Commission called for comments before proposing any rules, a move it first made shortly after the Dodd-Frank Act was passed into law.
 

How Individuals Can Win Non-Prosecution Agreements With the SEC

April 10, 2012

The SEC announced a landmark non-prosecution agreement last month, declining to prosecute a person (rather than a corporation) after he provided significant assistance during an investigation. The agency also issued guidance on how to win such credit. But rather than give executives a pathway to their own personal NPA, the guidelines illustrate just how difficult it will be to earn such a pass. More details inside.
 

Many Struggling With Risk Disclosures

April 03, 2012

Two years after the Securities and Exchange Commission enacted new proxy disclosure rules requiring companies to reveal more about how their boards oversee risk, many companies are still struggling with how to communicate aspects of their risk-management programs effectively. According to a recent study, disclosures are too basic and lack details on the company's approach to risk.
 

SEC Approves 2012 GAAP Taxonomy for XBRL Filings

March 30, 2012

The Securities and Exchange Commission has approved the 2012 U.S. GAAP financial reporting taxonomy as updated by the Financial Accounting Standards Board, giving companies the green light to use it for their XBRL filing obligations in 2012. The update reflects various changes to accounting standards since the 2011 taxonomy was published.
 

JOBS Act Inspires Criticism of Regulatory and Governance Rollback

March 27, 2012

The newest members of the public company ranks will now have five years to avoid corporate governance requirements, thanks to the JOBS Act passed by Congress last week. Critics say the measure will do little more than play to scam artists. "With securities fraud running at a record level ... any reasonable person would understand there needs to be adequate protection of investors," says Lynn Turner, governance activist and former SEC chief accountant.
 

SEC Speaks on Proxy Access

March 27, 2012

The SEC's latest batch of decisions on no-action letters offers a bit more insight for companies looking to thwart shareholder proposals about access to the proxy statement. The good news: The SEC did give several companies permission to ignore such proposals. The bad news: Most of those were issued for technical reasons, not any broad attempt by the SEC to limit shareholder proxy access. More details inside.
 

PCAOB Kicks Off Auditor Rotation Debate

March 27, 2012

A who's who of the auditing world convened at the Public Company Accounting Oversight Board last week for two days of discussion about term limits for audit firms' engagement with clients. Opinions were predictably diverse, and consensus was rare. Goodyear CFO Darren Wells, for example, said auditor rotation should only be required after an audit failure. More views inside.
 

SEC Reminds Auditors to Follow IASB on IFRS

March 23, 2012

The Securities and Exchange Commission is reminding auditors that their audit reports on financial statements prepared under International Financial Reporting Standards must comply with the international standard, not national flavors of it.
 

SEC Staff: Are Differences for FPIs Still Justified?

March 16, 2012

As the world awaits a decision from the SEC on U.S. adoption of international accounting standards, agency staffers are wondering whether they should consider changes in reporting requirements for foreign companies listed on U.S. exchanges. So many foreign issuers now list solely in the United States, they say, that reporting standards may need to be tightened.
 

Coming Soon to FASB Agenda: Contingencies Decision

March 13, 2012

The Financial Accounting Standards Board will soon make a decision on whether to move forward with a new standard on accounting for contingencies, although FASB Chairman Leslie Seidman was careful not to tip her hand on what that decision will be. The move has been on hold as the board assesses how well companies are meeting current requirements.
 

The Inexact Science of Making Sound, Defensible Business Judgments

March 13, 2012

Since 2008 executives have urged the SEC and others to consider issuing guidance to the capital markets to explain how regulators assess the reasonableness of business judgments, but those calls have gone unheeded. Now the Committee of Sponsoring Organizations has stepped forward with guidelines of its own on the topic. Details inside.
 

PCAOB Calls for More Scrutiny of Related-Party Transactions

March 06, 2012

Auditors are getting new pressure to sniff out business deals with insiders and to probe unusual transactions, including executive compensation deals, that might suggest something could be amiss. "There's a fair degree of push here to drill down further into compensation structures for executives," says Michael Scanlon, a partner with law firm Gibson, Dunn & Crutcher. More details inside.
 

SEC Turns Up the Heat on Private Equity, Hedge Funds

March 06, 2012

The SEC has been taking a harder look recently at the business practices of hedge funds and private-equity firms, and now that the Dodd-Frank Act requires many more funds to register with the SEC, more scrutiny can be expected. "The SEC staff has been warning the private-equity industry that it plans to significantly step up enforcement actions," says Robert Burwell, a partner at law firm Latham & Watkins.
 

More Clues on SEC Whistleblower Office

February 28, 2012

The SEC now receives an average of seven tips each day to its new Office of the Whistleblower, according to agency officials, and compliance departments are scrambling to shore up their own internal compliance operations in response. "Most of the activity we see is on investigation protocols around hotline calls," says Steve Kuzma of Ernst & Young. More inside.
 

Fresh SEC Guidance for Small Filers

February 28, 2012

Take heart, all you overworked, overwhelmed non-accelerated filers! The SEC has published its latest batch of guidance for small public companies, a 54-slide summary of filing errors and issues common to non-accelerated filers. From musings about the MD&A to questions about controls, and extra tips on how to ask the SEC for help, it's all in there.
 

SEC Staff Nearly Done With Plan for IFRS Adoption

February 23, 2012

Staffers at the SEC have nearly finished their vision of how the United States might move to International Financial Reporting Standards, SEC Chief Accountant Jim Kroeker said this week. The framework would demonstrate a "strong U.S. commitment" to use IFRS while preserving a role for the Financial Accounting Standards Board to endorse those standards here, he said.
 

Compliance Week Podcasts ...

Every week we chat with leading thinkers in compliance, auditing, risk management, public policy and more. These short (10-15 minutes) interviews are free to all. Follow Compliance Week podcasts on iTunes.

Compliance Week LinkedIn Group

Compliance Week now has a companion group on LinkedIn, where members can network and discuss the compliance and governance news of the day. Open to all compliance professionals, free to join.

Survey of the Week


Deloitte is conducting their annual Look Before You Leap: Managing Risks in Global Investments survey to better understand the approaches companies are taking to address compliance and integrity-related risks in emerging markets. 

Thought Leadership

The Risk Intelligent CCO
Sponsored by Deloitte

FCPA Compliance
Sponsored by Kroll Advisory Services

Upcoming Webcasts

ERP Security "Health Check"
Sponsored by ControlPanel GRC

Financial Continuous Monitoring
Sponsored by Infor

Event of the Week

World Class Financial Assurance
Sponsored by Infor