WASHINGTON — An investor advocacy group on Nov. 3 accused the board that oversees corporate auditors of paving the way for the Securities and Exchange Commission to end quarterly financial reporting by public companies.
Better Markets, a Washington-based nonprofit that advocates for stronger financial regulation, criticized a rule change proposed that day by the Public Company Accounting Oversight Board. The group said the change would allow auditors to rely on older financial statements during securities offerings.
The SEC proposed in May to let public companies file financial reports every six months instead of every quarter. According to Better Markets, about 280,000 commenters, mostly retail investors, told the SEC the change would harm them, and some financial industry groups, including the Managed Funds Association, SIFMA and Citadel, also opposed it.
Benjamin Schiffrin, the group’s director of securities policy, said the accounting board’s proposal would “help the SEC eliminate quarterly reporting by public companies and take key information away from investors.”
Schiffrin said existing rules bar auditors from relying on financial statements more than 134 days old in connection with a securities offering, which would conflict with a semiannual reporting schedule of roughly 180 days. He said the proposed fix appears to let auditors rely on statements as much as six months old.
“There is no public benefit to this rule change,” Schiffrin said, arguing that its only purpose is to let companies stop reporting quarterly while still complying with accounting rules.
The SEC has not finalized its semiannual reporting proposal. Schiffrin said the accounting board was acting as if it already knew the SEC would adopt the rule as proposed, and he noted that the board’s chair thanked SEC staff for their help at the meeting where the proposal was announced.
The board stressed that its change is only a proposal, according to Better Markets, but the group said there was no question the board intends to follow through.
The PCAOB, created by Congress in 2002, oversees the audits of public companies and operates under SEC supervision.
This report is based on information from Better Markets.
Source: Better Markets
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