» SEC News
SEC's Cox Rumored Among Potential Successors to Gonzales
Along with a number of current and former judges, Department of Justice (DOJ) officials, senators and others, SEC Chairman Christopher Cox is among names being floated in the rumor mill as potential permanent successors to former Attorney General Alberto Gonzales. Prior to coming to the SEC, Cox served 17 years in the U.S. Congress, including a stint as chairman of the House Committee on Homeland Security.
Wall Street Journal writers Gary Fields and Ashby Jones termed Cox's chance of being nominated Attorney General position a "long shot" in their article, "Politics, Time Deepen Challenge to Find Successor." "Mr. Cox is considered more valuable at the SEC," said Fields and Jones, noting that "some White House officials said Cox is considered 'too independent.'"
The likelihood of a potential Cox nomination for A.G. may also be impacted by the fact that the SEC currently is down one commissioner, with the recently announced departure of Commissioner Roel C. Campos, set to join Cooley Godward Kronish LLP as partner-in-charge of that firm's Washington, D.C., office. Lone Democratic Commissioner Annette Nazareth's term officially expired June 5, and President Bush has not yet acted to either renominate Nazareth or nominate a replacement.
Commissioner Paul S. Atkins is currently the highest-ranking commissioner from the Republican Party next to Cox, so if Cox were to go to DOJ, Atkins could potentially be named Acting SEC Chair. The remaining Republican commissioner is the newest appointee, Kathleen L. Casey.
Schumer Asks Big 4 to Make Clients Aware of SEC Guidance on FAS 140 Loan Modifications
Reuters reported late last week that it had obtained a letter from Sen. Charles Schumer (D-N.Y.) to the heads of the Big 4 audit firms asking the firms to make their clients aware of recent guidance from the SEC on permissibility of loan modifications under FASB rules that can help forestall defaults and foreclosures.
The Reuters article, by John Poirier, "Sen. Schumer Urges Big 4 on Mortgage Accounting," references guidance contained in a July 24 letter from SEC Chairman Cox to Rep. Barney Frank, Chairman of the House Financial Services Committee, in response to a request for guidance by Frank. The issue raised by Frank was whether FASB guidance, contained in FAS 140, permits lenders to modify the terms of previously transferred (i.e., sold/securitized) loans when default was "reasonably foreseeable" - with the modifications intended to help borrowers avoid default and foreclosure - and whether the lender would still be able to maintain sale treatment (i.e., off-balance sheet treatment) of the loans under FAS 140.
As further detailed in FEI's blog, although Cox's letter says FAS 140 does not preclude loan modifications when borrower default is "reasonably foreseen," there is some fine print in the detailed attachment to Cox's letter, provided by SEC Chief Accountant Conrad Hewitt, regarding limitations on what Qualified Special Purpose Entities, or QSPEs, can do under current GAAP.
SEC Seeks Comment on Discussion Paper of Advisory Committee to Improve Financial Reporting
Last week, the SEC posted for public comment the Discussion Paper (DP) drafted by Robert Pozen, Chair of the SEC Advisory Committee on Improvements to Financial Reporting (CIFR). The DP was discussed at CIFR's inaugural meeting Aug. 2, and as noted at that meeting, the committee decided to seek input on the issues outlined in the DP (summarized here). The DP was published in the Federal Register on Aug. 24, and the comment deadline is Sept. 24.
Five FEI members have been appointed to CIFR. NOTE: The company name of one member, Edward McClammy, SVP, CFO and Treasurer of Varian, Inc., was inadvertently listed as another company in the Aug. 15 issue of FEI Express. We apologize for this error.
XBRL-US Meets with FEI
On Aug. 21, Mark Bolgiano, President and CEO of XBRL-US, met with FEI CEO Michael Cangemi to give a status report on eXtensible Business Reporting Language (XBRL) taxonomy development. Members of FEI's Committee on Finance & Information Technology (CFIT) helped arrange the meeting.
Last September, the SEC awarded three separate contracts to upgrade its public company disclosure system. (See "Interactive Data: Is the SEC's Priority Your Priority" in the March 2007 issue of Financial Executive)
The SEC awarded the contract to complete the writing of taxonomies, or computer labels, to XBRL-US, so companies in all industries can file their financial reports. XBRL-US is responsible for the development of the computer standard in the U.S. It is also responsible for raising awareness, promoting adoption and facilitating research and development in XBRL and business reporting.
Michael agreed to help XBRL-US raise awareness among FEI members. The first step will be to publicize a series of free one-hour webinars to learn about XBRL, the SEC Voluntary Filing Program and how you can get started. Two programs are available.
- Introduction to XBRL and the SEC VFP - This covers XBRL basics -- what it is, who it benefits, the SEC Voluntary Filing Program, the tools available and how you can get started.
- XBRL for Financial Reporting - a more in-depth look at XBRL, this program covers the basics of XBRL along with demonstrations to give a view into how you can create XBRL documents and how XBRL can improve the efficiency of your internal reporting systems.
Dates for Upcoming Programs:
September 11- Introduction to XBRL and the SEC VFP
- Jeff Naumann, Securities and Exchange Commission
- Tom Jacobs, 3M Corporation
- Mike Willis, PricewaterhouseCoopers
- Greg Zegarowski, Financial Leadership Corporation
September 25 - XBRL for Financial Reporting
October 9 - Introduction to XBRL and the SEC VFP
October 23 - XBRL for Financial Reporting
November 6 - Introduction to XBRL and the SEC VFP
November 27 - XBRL for Financial Reporting
Time: Tuesdays at 4 pm ET
To register online, visit http://share.xbrl.us/webinar/default.aspx or go to www.xbrl.us and click on the link under "Upcoming Events." A link to the event will be emailed to you prior to the webinar. To get the most up-to-date information on the schedule and speakers, visit www.xbrl.us.
SEC Posts Final Rule on Adoption of Updated EDGAR Manual
The SEC is adopting revisions to the Electronic Data Gathering, Analysis, and Retrieval System (EDGAR) Filer Manual to reflect updates to the EDGAR system. Revisions are being made primarily to support the expansion of the current interactive data voluntary reporting program (XBRL).
On Aug. 15, the SEC posted a final rule: "Adoption of Updated EDGAR Manual." The effective date was Aug. 20, and the final rule is available here.
» Congressional Developments
Congress to Examine Credit and Mortgage Markets Crises
The House Financial Services Committee recently announced that it will hold a general oversight hearing Sept. 5 on the current crises in the credit markets, mortgage market and the implications for the U.S consumer and the economy. The hearing will feature representatives from the Treasury Department, the Federal Reserve and the mortgage banking industry.
Sen. Christopher Dodd (D-Conn.), Chairman of the Senate Banking, Housing, and Urban Affairs Committee, recently sent a letter to the Treasury Department and the Federal Housing Administration (FHA) urging them "to take the necessary administrative steps to enable the FHA to provide more affordable loans for American homeowners who are in danger of losing their homes due to bad lending practices." The big three credit rating agencies (Moody's, Standard & Poor's and Fitch) are also in the line of fire for their perceived role in the crisis. Critics have argued that the Big Three failed to downgrade residential mortgage-backed securities when they should have, and the resulting implosion led to the collapse of several hedge funds and the loss of tens of thousands of jobs in the mortgage industry.
Whether Congress will attempt to increase its oversight of the rating agencies to mitigate this problem remains unclear. FEI's Committee on Corporate Finance (CCF) will continue to monitor these issues, and will provide updates as appropriate. For more information, please contact Mark Prysock at mprysock@FinancialExecutives.org.
Legislation Addresses Problems with State Withholding Taxes
States and localities currently have widely inconsistent standards regarding the requirements for employees to file non-resident personal income tax returns and for employers to withhold income tax on employees who work outside their state of residence. Employees who travel outside their state of residence for business purposes, even for a few days, are subject to onerous administrative burdens because, in addition to filing federal and home state tax returns, they also may be legally required to file an income tax return in every other state into which they traveled. Companies are required to incur extraordinary expenses in an attempt to comply with the non-resident withholding requirements.
Reps. Hank Johnson (D-Ga.) and Chris Cannon (R-Utah) recently introduced legislation (The Mobile Workforce State Income Tax Fairness and Simplification Act of 2007, HR 3359) to address this issue. It would limit the authority of states to impose income taxes on nonresident employees, as follows:
- Wages paid to an employee who performs duties in more than one state or locality shall not be subject to the income tax and withholding laws of any state or locality other than the following:
- The employee's resident state and locality, and
- The state and locality in which the employee is physically present performing duties for more than 60 days in the calendar year.
- Professional entertainers, athletes and nationally prominent public figures would not be protected by the 60-day threshold.
FEI's Tax Committee strongly supports this legislation, and is working with the State Council on Taxation to persuade Congress to enact it. For more information on this issue, please contact Mark Prysock at mprysock@FinancialExecutives.org.
» Regulatory Developments
FASB Meets on Conceptual Framework, Postretirement Benefit Obligations
Earlier today, the FASB board discussed comments raised on its conceptual framework preliminary views document, particularly comments relating to the stewardship concept, and whether the objective of "financial reporting" should be focused on investors or more broadly, on "capital providers" (including creditors). FASB also discussed the scope of and priorities for the second phase of its project on postretirement benefit obligations. Additional information can be found in today's board handout, and a summary of the meeting will be posted later today on www.FinancialExecutives.org.
IASB Explains Effect of IFRIC 14 on Defined-Benefit Pension Assets and Minimum Funding
Last week, the IASB posted an explanation of the effect of IFRIC 14 (an interpretation of IAS 19), "The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction." One key issue, the IASB noted, is that IFRIC 14 "does not change the rules on funding" pensions, since such requirements "are set by regulators and pension fund trustees, and it is for management to decide how it satisfies those requirements." Other issues involve liability recognition. Further details are in the IASB's announcement.
Want to know more about the changing global financial reporting landscape? Sign up now for FEI's Global Financial Reporting Conference - What IFRS Means to the GAAP Filer, to be held Sept. 28 in New York City (see "featured event" section below for more details).
AFL-CIO Sends Letter to Big 4 CEOs on Stock Options Backdating
Earlier this week, Richard Trumka, Secretary-Treasurer of the AFL-CIO, sent letters to the CEOs of the Big 4 audit firms outlining "steps to help accounting firms better detect the manipulation of stock option grants and spur further reform of the audit process. The recommendations resulted from a series of meetings this year between the labor federation and the four largest accounting firms regarding stock option abuse." See the press release here.
» Regulation Update
Regulatory Roundup for Public Companies
How FEI Members Can Get Up-to-the-Minute Regulatory News
For the latest information on regulatory developments, visit www.FinancialExecutives.org, which includes frequent updates of regulatory news. Or, sign up here to receive real-time email updates from FEI's Financial Reporting Blog.
PwC Seeks FEI Participation in Financial Statement Survey
PricewaterhouseCoopers is asking FEI members to participate in a survey designed to help make visible the views of the preparer communities in one of the most pressing reporting issues of our time -- performance reporting. This is particularly important at a time when the IASB and FASB have embarked on a fundamental review of the structure and focus of the primary financial statements. This work may change fundamentally how financial statements are presented and influence how corporate performance is measured, communicated and interpreted.
PwC is undertaking a major global survey on performance reporting/financial statement presentation within both the preparer and investment communities. Through the survey process, PwC aims to:
- make visible to the standard-setters the views of both preparers of financial statements and investors and analysts;
- identify areas where consensus appears to exist; and
- open a dialogue on finding practical, technically sound solutions that are shaped by, and enjoy credibility with, market participants.
While the survey has been targeted at certain preparer and investor groups for ease of communication, any preparer is welcome to fill in the survey. If you know of other interested parties or organizations that would be willing to participate, please contact Alison Thomas at PwC (email@example.com) or forward the survey link. The greater the number of responses, the more statistically significant the results will be. All responses will be treated anonymously.
To access the survey, click here.
Internal Costs for 404 Compliance Down, But Audit Fees, Other Costs Rising, Foley & Lardner Study Says
Earlier this month, law firm Foley & Lardner LLP announced the results of its fifth annual study, "The Cost of Being Public in the Era of Sarbanes-Oxley." The report shows that companies of all sizes have experienced double-digit percentage increases in the costs associated with corporate governance reform (generally, not only with respect to Sarbanes-Oxley Section 404) during fiscal year 2006 in comparison to fiscal year 2001, the year prior to the enactment of the Sarbanes-Oxley Act.
Although the report found internal compliance costs associated with Section 404 compliance decreased in 2006, out-of-pocket costs associated with Sarbanes-Oxley compliance were up 13 percent in fiscal year 2006 for public companies with annual revenue of under $1 billion, and were up 12 percent over the same period for public companies with annual revenues over $1 billion. The increased cost of audit fees, board compensation and legal fees were the primary drivers of these out-of-pocket percentage increases.
The report also found that, on average, external audit fees increased 271 percent during the five-year period between fiscal years 2001-06 for companies with under $1 billion in revenue. During just the most recent year of the study, between fiscal years 2005 and 2006, external audit fees for these companies increased 4 percent.
» Job Listing
Job 12515 - CFO
Public pharmaceutical and life sciences manufacturing company in the Southeast is looking for a CFO. The CFO will report to the President/CEO and the Audit Committee. He/she will have full and broad worldwide responsibility for the direction and management of all finance, financial reporting functions and investor relations. The department led by this CFO has a staff of twenty-five.
The CFO will have a career characterized by leading important areas of the business, including accounting, controllership, budgeting, planning, acquisitions and divestitures and auditing. He/She will have an undergraduate degree in accounting or finance. A master's degree in finance or accounting is highly desirable. A CPA is required, with public accounting experience desired. The CFO will have a minimum of 10 to 15 years experience in accounting/finance, with at least 3-5 years in the position of CFO in a multi-national public company or 7-10 years of a senior management (VP Level) role in corporate finance for a multinational public company.
For further details about this job opportunity and to view more jobs, visit the FEI Job Center
» Featured Event
Global Financial Reporting Convergence Conference
September 28 | Marriott Marquis Time Square | New York, NY
$895 for FEI members; $1,295 non-members | 8 CPE Credits
The complexity of today's accounting and financial reporting disclosures fall short of meeting the information needs of investors and the global capital markets. A potential solution to this growing problem is the convergence of U.S. GAAP and International Financial Reporting Standards (IFRS). Rules-based and principled-based standards will need to be harmonized in a new reporting model built on principles-based standards that are simpler to adopt and interpret.
This one-day conference, co-sponsored by the European-American Business Council, will provide a foundation for understanding the primary differences between U.S. GAAP and IFRS, and examine what is required to reconcile those differences. This program will provide the information necessary to assess the impact financial reporting convergence could have on your company's financial reporting requirements, as well as providing critical background on accounting and reporting convergence from the perspectives of U.S. and International standard-setters and regulators.
Confirmed speakers include:
- FASB Chairman Bob Herz
- IASB Vice Chairman Tom Jones
- PCAOB Chairman Mark Olson
- IAASB (International Auditing and Assurance Standards Board) Member Craig W. Crawford
New Addition! -- Breakfast Session Presented by Clarity Systems
Automated External Reporting & Converting From Gaap To Ifrs
Statutory reporting is challenging at the best of times. The external reporting process becomes even more complex when considering the implications of moving from GAAP to IFRS. This session will discuss current trends in external financial reporting and highlight new ways to automate the external financial reporting process. A case study of an organization that is moving from GAAP to IFRS will be used to illustrate the issues associated with moving to a new accounting standard, as well as to highlight the features available within a fully automated external financial reporting environment.
» FEI Resources
NEW! PayCheck - Online Compensation Tool
Search the 2007 FEI/FERF Compensation Survey with PayCheck, our new online enhancement for instant results! Examine the more than 1,800 responses of financial executives based on criteria such as title, company industry, company type, company location, company annual revenue, base salary and annual bonus opportunity.
Access PayCheck and download the compensation survey here.
Are You a CFO in a 'Troubled' Industry?
Want to talk about how your company is facing critical challenges in a difficult environment? Ellen Heffes, Executive Editor of Financial Executive, wants to hear from you - for the cover story of the November issue. Contact: eheffes@FinancialExecutives.org or 973.765.1050.
» Teleconferences, Webcasts, Resources and Surveys
Marsh's New Reality of Risk Panel Discussion: "Global D&O Issues"
Sept. 19 | 11 am ET
Directors and officers of multinational organizations face an ever increasing variety of threats. Countries throughout the world are moving toward U.S.-style litigation that could lead to more lawsuits against directors and officers in more venues. International D&O liability insurance is a topic of enormous significance and controversy. For more information about this event, available as either a teleconference or a Webcast, click here.
Key Performance Indicators (KPIs) for the Financial Supply Chain
September 20 | 2 pm ET, 11 am PT | 1 hour, CPE credit approval pending
Free to FEI Members and Non-members
Join us for this informative one-hour webcast and discover how Global 2000 and mid-market companies measure and control performance of their Procure-to-Pay (P2P) operations. Learn how to identify and select the proper KPIs to manage the business in order to be gain continuous improvement in P2P automation. Gain key insights from KPIs that best-in-class organizations are using to measure their success.
Daniel Brogan, formerly the Director of Strategic Sourcing at EarthLink, will present a Performance Measurement Framework that will help you to build the foundation for an executive dashboard and KPIs that will assist you in driving successful outcomes for P2P operations. Topics include:
- Why P2P outcomes need to be measured
- Best-practice KPIs for financial executives
- Challenges in building the right KPIs
- Required attributes for successful KPIs
- Indicators that make a difference
- How to make it happen
Best Practices for Boards of Directors, by PwC
PwC's Global Best Practices team has prepared a white paper on "Building Blocks of Effective Corporate Boards." The document describes how leading boards are enhancing corporate governance as they seek ways to better balance their role as compliance watchdogs with their role of participating in strategic planning and serving as a sounding board for management.
To access the white paper, click here.
Power Presentation Skills - How to Convince & Motivate Your Audience
CFRI Pre-Conference Workshop
November 11 | Marriott Marquis Times Square | New York, NY
$249 with purchase of CFRI Conference; $299 for FEI members; $495 non-members | 4 CPE credits
If you're looking to develop your presentation skills to become more self assured, better organized, more relaxed, more convincing, and in control - then this workshop is for you! David Bowman will arm you with communication skills, teach you how to deal with nerves, develop your style and message, improve use of visual aids, and more.
Mark your calendars!
FEI Hall of Fame Gala
November 11 | Cipriani 23rd Street| New York, NY
Proceeds benefit the work of Financial Executives Research Foundation (FERF)
Additional information is available here.
The 2007 class of inductees will be formally celebrated at the FEI Hall of Fame Gala.
26th Annual Current Financial Reporting Issues Conference 2007
November 12-13 | Marriott Marquis Times Square | New York, NY
$1,045 for FEI members; $1,395 non-members |19 CPE Credits
Expect key updates from the FASB, SEC, IASB and PCAOB on recent financial accounting standards and reporting requirements, including:
- new requirements for accounting for business combinations
- latest updates on Sarbanes-Oxley Section 404 Internal Controls reporting compliance
- important insight into recent developments on FAS 133 on Accounting for Derivatives and Hedging Activities
- updates on international convergence and combating complexity in financial reporting.
Save the Date!
May 4-6 | Arizona Biltmore Resort & Spa | Phoenix, AZ
» New Member Welcome
Congratulations to all the new members accepted in the last 30 days. See a complete list
» Online Resources at FEI
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