Christopher Cox, the current SEC chairman, spoke at the AICPA National Conference on Current SEC and PCAOB Developments* on December 5. His speech focused on two topics: making financial reporting less complex and encouraging greater competition in the auditing market. We shall address the first matter in this column and the second issue in a later essay.
Cox succinctly states his thesis: "The need for greater clarity and transparency is obvious. The accounting scandals that our nation and the world have now mostly weathered were made possible in part by the sheer complexity of the rules. Criminal conduct could be concealed in a thicket of detail. Conformity to hundreds of technical rules became not a shield to protect investors, but a sword to be wielded against them." (Read the full speech.)
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