With Mary Shapiro’s Appointment as New SEC Chair Will XBRL and IFRS still be a Focus?
Posted on January 9th, 2009 by Katina »Permalink
While financial pundits are debating what consequences Mary Shapiro’s appointment as the new SEC chief will have on corporate America, Audit Trail sat down with two financial experts to get their take on what to expect once Shapiro takes charge. Will she be spending most of her time re-establishing the SEC’s lost credibility as the “investor’s advocate” stemming from the recent Bernie Madoff episode or should companies start acting fast on XBRL and IFRS transitions? Let’s see what our experts have to say.
Phil Livingston, a co-author of the Sarbanes Oxley act and Approva3 board member feels that Shapiro will focus her efforts on getting the securities firms back on track versus more corporate compliance issues. In his own words:
Mary Shapiro is an experienced regulator. Her unique skill set seems to be that she is familiar with both the Commodity Futures Trading Commission (CFTC) and the SEC. There seems to be broad consensus that these two regulatory bodies will be combined in the early part of the Obama administration.
I think she will have to refocus the SEC on enforcement actions and put Chairman Cox’s XBRL and IFRS initiatives on the backburner for some period. Her experience with the Financial Industrial Regulatory Authority (FINRA) will allow her to focus the SEC’s efforts on the securities firms (Goldman and Morgan Stanley) and financial institutions as opposed to corporate compliance issues like financial reporting.
Another obvious action will be the implementation of “say on pay” rules that President-elect Obama appears to have promised the unions. This will give shareholders and pension plan a non-binding, advisory proxy vote on executive compensation each year.
On the other hand, Michael Cangemi, Approva advisory board member and the former CEO of Financial Executives International (FEI), a leading industry think tank for senior-level corporate financial executives, feels that the guard is not only changing at the SEC but this historic election has given President-elect Obama a mandate for macro change. Contrary to Livingston’s prediction, Cangemi feels that the SEC will continue to push companies towards XBRL and IFRS implementations under Shapiro’s leadership. He personally endorses moving to XBRL:
I believe it is a foundation technology that will eventually achieve implementation, but I caution the SEC that you cannot mandate a deadline for a technology project. Fast tracking the tags was essential and now the SEC must guide the pace of implementation to allow it to be efficient and effective, allowing time for the technology to be available at a reasonable cost. Once the XBRL tags are built in to ERP systems, the small cost will be well worth the benefits. I see this tagged data leading to better internal reporting and analysis and more automated continuous auditing.
As for IFRS – Cangemi believes that with the melding of capital markets worldwide and the need for one language of accounting, it will continue to be a major milestone for SEC. However, the pace of implementation should be measured for smaller public companies and private companies, who desperately need to be focused on their business.
A recent posting by Tom Quaadman on Shapiro’s appointment sums it up saying, “Yes the 1930’s may have required a pirate of Wall Street, but our times require something much different. Mary Shapiro’s resume points to the experience we need, let’s see if that that translates into the action required.”
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Tags: Mary Shapiro, SEC, XBRL, IFRS, Phil Livingston,
January 15th, 2009 at 5:53 pm
IFRS and XBRL on the backburner? Aren’t we too far down the road for that? Plus regs, technology, and oversight are not discrete concepts, but part of a whole – don’t you think?