The capital markets are not well served, and US competitiveness is hindered, when scarce financial resources are not used in value-enhancing business initiatives but to satisfy disclosure and accounting requirements that fail to meet cost-benefit tests. The
FEI's Four-Point Plan (PDF 59k) recommends action by both FASB and IASB, including global convergence and mutual recognition:
|
FEI's Recommendations to Address Complexity in Financial Reporting
- 1. The FASB and SEC, in coordination with key financial reporting stakeholders (preparers, auditors and financial statement users), should take steps to end the proliferation of detailed rules.
- a. Agree to a stable platform for a specified period of time, during which no new accounting standards would be issued. Efforts would be shifted from new standards to completion of the conceptual framework, including the development of a comprehensive accounting and disclosure model that is integrated with the codification project.
- b. Upon completion of the model,work jointly with the IASB to evaluate proposals by stakeholders to improve and simplify the most complex standards by making them more principles-based, and eliminate important differences between US GAAP and IFRS. Stakeholders in the financial reporting process should continue to encourage global convergence and mutual recognition of high-quality accounting standards.
- 2. Congress should consider meaningful class-action reform.
- 3. The SEC and PCAOB should develop a framework that provides effective regulation in a principles-based environment, one that balances the objective of investor protection with the need to maintain market competitiveness.
- 4. Stakeholders should come together to form an independent 'Committee on Complexity'.
|
