New SEC committee set up to examine financial reporting systems

Body aims to reduce complexity and improve usability for investors

Christopher Cox, chairman of the US Securities and Exchange Commission, has announced the creation of an advisory committee that will examine the US financial reporting system, with the aim of reducing unnecessary complexity and making information more understandable for investors.The SEC Advisory Committee on Improvements to Financial Reporting will study the causes of complexity, and recommend to the Commission how to make financial reports clearer and more beneficial to investors, reduce costs and unnecessary burdens for preparers, and better utilise advances in technology to enhance all aspects of financial reporting."Our current system of financial reporting has become unnecessarily complex for investors, companies, and the markets generally," said Cox. "The time is ripe to review how that system can be made less complex and more useful to investors."Robert Pozen, chairman of MFS Investment Management in Boston and former vice-chairman of Fidelity Investments, will chair the SEC’s advisory committee. Between 13 and 17 additional members with varied backgrounds are expected to be appointed to the advisory committee within the next few weeks.The committee’s work will focus on removing practical and structural impediments that reduce transparency or unnecessarily increase the cost of preparing and analysing financial reports to the detriment of the investor. Technology is also a big focus. The advisory committee will concentrate on how technology can help address accounting complexity by making financial information more useful to a greater number of investors.