SEC Chief Accountant Wesley Bricker described his recommendations to improve and sustain the quality of financial reporting.
In remarks at the Institute of Chartered Accountants in England and Wales, Mr. Bricker asserted that the integrity of the financial reporting process remains crucial to the strength of our capital markets. He noted that in our highly connected world of global investing, technologies that help retail investors may also provide opportunities for fraudulent activity. To maintain the quality of financial reporting and reduce risk to investors, Mr. Bricker recommended:
- minimizing expectation gaps between the levels of expected performance and actual performance by investors and accountants;
- keeping general purpose financial reporting separate from reports with different objectives, such as special purpose financial reports;
- promoting the financial education and literacy of members of the financial reporting structure; and
- encouraging collaboration among participants in the financial reporting structure.
Mr. Bricker also highlighted the importance of audit regulators and audit standard-setters in maintaining the structure of financial reporting. Mr. Bricker recommended ensuring the quality of international audit-related standards, which impact (i) U.S. investors and asset managers with foreign equity and long-term debt securities, and (ii) U.S.-based multinational companies.