2015 AICPA SEC Conference Headline Speeches


Several themes emerged from this year’s conference, many of which have been addressed at the conference in prior years, including:

  • Implementation challenges and reminders for the new standard on revenue recognition and forthcoming standards on leases and financial instruments
  • The need for continued improvement in internal control over financial reporting and non-GAAP measures
  • The importance of audit committees and increasing responsibilities of committee members

Following are notable messages from many of the headliners and links to their speeches. During the conference, Crowe representatives tweeted comments, some of which are included here.

From the SEC

Mary Jo White

Chair, SEC

In the keynote speech, SEC Chair Mary Jo White discussed the responsibilities of preparers, auditors, audit committees, standard-setters, and regulators.

MJ White: #SEC reminder of respective responsibilities by preparers, auditors, audit committees, and regulators for reporting #AICPASEC
– Crowe tweet from the conference

She described preparers as the “linchpin of high-quality, reliable financial reporting,” whose financial reporting responsibilities depend significantly on the design and effectiveness of internal control over financial reporting (ICFR). She also highlighted the importance of involving finance and legal teams, as well as audit committees, when evaluating the use of non-GAAP measures as “useful market communication devices.”

Describing auditors and audit committees as gatekeepers for high-quality financial reporting and investor protection, White summarized recent signs of both audit quality improvement and audit quality failure. She highlighted the risk of an increased workload for some audit committees and encouraged audit committee members to maintain their commitment to the oversight of financial reporting.

SEC chair Mary Jo White concerned about audit committee workloads. Are those serving on multiple boards doing the job effectively? #AICPASEC
– Crowe tweet from the conference

White noted that there is more information to come on the SEC’s permitting supplemental International Financial Reporting Standards (IFRS) disclosure by domestic registrants. Regarding the disclosure effectiveness project, progress is expected in 2016 on Regulation S-K. Also expected are various technical changes to financial statement disclosures and the presentation of information and tools on sec.gov.

SEC Chair White on disclosure effectiveness; last week, Congress passed bill on modernization in highway bill....interesting #AICPASEC
– Crowe tweet from the conference

James V. Schnurr

Chief Accountant, Office of the Chief Accountant (OCA)

The speech of OCA Chief Accountant Jim Schnurr covered his views on the state of the accounting profession, disclosure effectiveness, the role of audit committees, and the PCAOB’s work.

He highlighted the need for high-quality financial information and emphasized the role of preparers and auditors in credible financial reporting. He elaborated on the SEC chair’s remarks about recent signs of audit quality failures, discussing specifically the PCAOB’s findings related to ICFR audit deficiencies in addition to enforcement cases against two accounting firms.

SEC chief accountant: Pleased w results of @TheCAQ investor confidence study; notes ICFR w auditor stamp are valued by investors #AICPASEC
– Crowe tweet from the conference
The ninth annual “Main Street Investor Survey” from the Center for Audit Quality (CAQ) gauges investor confidence in U.S. capital markets, global capital markets, audited financial information, and investing in U.S. publicly traded companies.

The chief accountant also addressed auditor independence and noted that it “is essential to the credibility of financial reporting.” In this regard, the SEC’s OCA focuses on auditor independence, primarily on the growth trend in accounting firms’ consulting practices.

SEC Chief Accountant Schnurr warns of potential risks associated with growth in audit firm consulting practices. #AICPASEC
– Crowe tweet from the conference

Schnurr also addressed the interaction of disclosure effectiveness when it comes to accounting judgments and outlined a process for practitioners to consider when applying judgment to disclosure matters. He noted that, as part of the disclosure effectiveness project, his office will be coordinating with the FASB, and he praised the board for its recent proposal for the omission of an immaterial disclosure not to be considered an accounting error.

Echoing White’s comments about the increasing responsibilities of audit committee members, he cautioned members “not to lose sight of the key SEC and exchange listing requirements for audit committee performance.” He emphasized the role of the audit committee in hiring and retaining an auditor and said that the auditor’s responsibility is to shareholders rather than management of a company.

Closing his remarks with a discussion of PCAOB matters, Schnurr noted that the PCAOB has retained the services of an external consultant to review its standard-setting process.

The SEC’s Deputy Chief Accountants in OCA

The SEC’s deputy chief accountants from OCA – Wes Bricker, Brian Croteau, and Julie Erhardt – also spoke at the conference.


Wesley R. Bricker

Deputy Chief Accountant, OCA

Wes Bricker spoke about implementation activities for the new revenue recognition standard, other standard-setting projects that are near completion, recent accounting consultations with his office, and restatement activity.

Alluding to prior speeches about the new revenue recognition standard, he re-emphasized the continuing collaboration among industry groups and the escalation of implementation questions to the FASB and the IASB’s joint transition resource group (TRG) on a timely basis. He said that the SEC staff looks forward to reviewing more detailed disclosures about the expected effect of the new standard in the annual financial statements that will be filed in the next few months.

Bricker elaborated on the proposed financial instruments impairment standard, which is near completion. He noted that some of the proposal’s foundational concepts are already present in existing GAAP for other accounting estimates, and he emphasized that the proposal, together with Staff Accounting Bulletin (SAB) No. 102, would require a best estimate of losses, the use of available information, and the execution of procedural discipline.

According to Bricker, the three most frequently consulted-about accounting topics are revenue recognition, business combinations, and segment reporting. He noted a troublesome view expressed by some SEC registrants during consultations: that competitive harm is appropriate justification for not applying a GAAP standard or that applying a GAAP standard is misleading. He recommended that registrants instead consider what information is useful to investors and how that information can be reported appropriately.

On restatements, Bricker reported that the three most commonly identified areas are debt/equity accounting, statement of cash flows classification, and income tax accounting. He also observed that, in light of recent restatements, companies should focus on (1) financial reporting competence and other internal controls over the preparation and review process and (2) assessing whether company resources receive sufficient training and competence to support high-quality financial reporting.

Restatements down from peak 874 in '14 & 541 YTD thru Sep '15. Some topics concentrated in small/mid filers, but not on firm size. #AICPASEC
– Crowe tweet from the conference


Brian T. Croteau

Deputy Chief Accountant, OCA

In his remarks, Brian Croteau covered ICFR, audit committee reporting, auditor independence, and PCAOB-related matters.

Regarding ICFR, he was encouraged that for the second consecutive year, the SEC has observed an uptick in material weaknesses identified when issuers have not also identified a material misstatement. He reminded management and auditors of the control deficiency evaluation process in detail, highlighting within that process the evaluation of potential misstatements, or the “could factor,” that often requires management to evaluate information that is incremental to a SAB No. 99 materiality assessment of known errors.

Croteau noted that the SEC is still evaluating next steps for the concept release on possible revisions to audit committee disclosures, but he is encouraged by the momentum in voluntary disclosures. “As chair White mentioned, many commenters [on the concept release] expressed support for considering whether and how to improve disclosures being made under current rules,” he said, but there were “mixed views about the need for additional detailed disclosure requirements.”

SEC Deputy Croteau: SEC evaluating next steps; encouraged by the momentum in voluntary disclosures. http://ow.ly/VFMLP #AICPASEC
– Crowe tweet from the conference
Enhancing the Audit Committee Report: A Call to Action, a product of the Audit Committee Collaboration, including the CAQ, is built on the premise that those with a stake in financial markets should understand and have confidence in the audit committee’s work.

Another useful report is the Audit Committee Transparency Barometer. Published jointly by the CAQ and Audit Analytics, it presents findings from extensive analysis of audit committee disclosures in proxy statements, measuring the robustness of these disclosures among Standard & Poor’s Composite 1500 companies.

Specifically addressing recent auditor independence experiences related to prohibited nonaudit services, Croteau advised management and audit committees to implement policies that monitor nonaudit services and address the risk of scope creep to avoid situations where those nonaudit services ultimately impair the auditor’s independence.


Julie A. Erhardt

Deputy Chief Accountant, OCA

Julie Erhardt discussed the U.S. engagement with IFRS as issued by the IASB, including global perspectives on U.S. involvement.

OCA Staff

Following are the topics addressed by OCA accounting staff and fellows and links to their speeches:

  Topics Addressed  
Kris Shirley
Professional Accounting Fellow
  • Identifying the principal or most advantageous market for fair value measurement
  • Use of cost basis as fair value
  • ICFR for fair value measurements for illiquid assets and liabilities
Michael W. Husich
Senior Associate Chief Accountant
  • OCA auditor independence consultation process
  • Auditor independence as a shared responsibility
  • Partner rotation
  • Bookkeeping/financial statement preparation
Christopher M. Rickli
Professional Accounting Fellow
  • SAB No. 102 reminders, including data reliability and documentation of adjustments
  • Consolidation of certain securitization vehicles and consideration of risk retention
Ashley Wright
Professional Accounting Fellow
  • Sponsor’s accounting for a single-employer defined-benefit pension plan, including changes in key assumptions to certain pension accounting measurements and selection of market interest information
  • Implementation of the new revenue recognition standard
Christopher D. Semesky
Professional Accounting Fellow
  • Customer incentives (gross versus net)
  • New consolidation guidance, including whether a decision-maker’s fee is a variable interest
  • Impact of foreign exchange restrictions on control and consolidation
Courtney D. Sachtleben
Professional Accounting Fellow
  • Segment reporting
Barry Kanczuker
Associate Chief Accountant
  • New guidance on discontinued operations
  • Post-vesting restrictions on measurement of share-based awards

SEC fellow Chris Rickli on ALLL & PCAOB inspection comments. Reminds registrants about SAB 102 incl key documents and process #AICPASEC

Segment reporting again! Annual topic. This has to be the longest running topic at @AICPA_SECconf FAS 131 issued in 1997! #AICPASEC
– Crowe tweets from the conference

From the FASB and the IASB

Russell G. Golden

Chairman, FASB

The FASB chairman’s remarks opened and closed on the topic of maintaining the independence of standard-setters from political and special-interest influence.

Russell Golden highlighted the successes of the joint revenue recognition TRG created by the IASB and the FASB to assist with managing implementation issues for the new revenue recognition standard. The successes include three exposure drafts issued based on feedback from the revenue recognition TRG as well as final guidance and staff papers. Golden also noted three minor areas in which the new guidance is not converged with the IASB’s.

The FASB expects to publish a new standard on the impairment of financial instruments in early 2016. To help identify implementation issues, the board has already created a TRG for impairment ahead of issuing the final standard. Golden spent a considerable amount of time addressing the following four areas of misinformation related to the forthcoming impairment model. The chairman believes that none of these statements about the new impairment standard is true:

  • The new standard will require businesses to develop and install costly, complex new systems.
  • Bank examiners will take a more conservative view.
  • The credit crisis involved only large banks.
  • The standard takes an unrealistic view of the economics of loan financing.

Golden provided updates on various projects in the FASB pipeline, including the disclosure framework that includes the materiality project. He also gave updates on hedging, the definition of a business, and the leases project. The FASB is not planning to create a TRG for leases, but it will monitor the implementation process and be ready to provide education as needed. In addition, Golden discussed, in detail, the cost-benefit analysis undertaken to issue new standards in the context of the board’s decision to issue the new lease standard.

As part of its future agenda, the board intends to seek feedback from stakeholders on the most important topics that the FASB should be addressing through standard-setting.


Hans Hoogervorst

Chairman, IASB

IASB Chairman Hans Hoogervorst spoke about the converged revenue recognition standard under IFRS and the standard on leases that the IASB will issue during the second week of January 2016. He noted Asian progress toward adopting IFRS as issued by the IASB in the last year. Looking forward, the board must make financial reporting easier to digest while maintaining the quality of standards.

Revenue Recognition

Jim Dolinar, chair of the AICPA’s Financial Reporting Executive Committee (FinREC), explained how the AICPA is helping with implementation of the revenue recognition standard. The AICPA’s 16 industry task forces are evaluating the impact with the goal of providing application observations for each industry. Draft implementation issues are posted to the Revenue Recognition page at the AICPA Financial Reporting Center.

Jim Dolinar provides update on AICPA efforts on rev rec; 16 industry task forces; > 200 volunteers #AICPASEC

Poll on rev rec: 9% what new standard? 17% done initial analysis. Rest just starting #AICPASEC @CroweHorwath_US

Rev Rec adoption: full or modified retrospective? Majority are unsure, many stakeholders to consider #AICPASEC
– Crowe tweets from the conference

From the PCAOB

James R. Doty

Chairman, PCAOB

PCAOB Chairman Jim Doty spoke about the PCAOB’s mission, auditor incentives as they relate to audit quality, initiatives to enhance the audit, and the maintenance of public confidence in the audit profession. He said, “What an audit committee signals – about both fees and other matters – establishes implicit incentives for auditors, and those tacit signals may not all promote quality.”

More from PCAOB Chair Doty-Audit Committee behavior has strong influence over audit quality

PCAOB Chair Doty-achievements of PCAOB: Changed auditor behavior; Improved audit quality; Improved market access to capital
– Crowe tweets from the conference

Jay D. Hanson

Board Member, PCAOB

Board member Jay Hanson’s remarks were about the PCAOB standard-setting process and projects, preparer feedback on ICFR controls, and audit inspection findings on risk assessment standards.

Helen A. Munter

Director of the Division of Registration and Inspections, PCAOB

In her speech, Helen Munter addressed audit quality in light of her experience with audit firm inspections and plans for 2016.

From the Center for Audit Quality (CAQ)

Cindy Fornelli

Executive Director, CAQ

In her remarks, CAQ Executive Director Cindy Fornelli discussed the CAQ’s work on audit quality indicators, the anti-fraud collaboration, the CAQ’s engagement with academia and audit professionals, and cybersecurity.

Released in April 2014, the CAQ Approach to Audit Quality Indicators represents a two-year effort by the CAQ, with its member firms, to develop perspectives regarding which indicators may be most relevant to stakeholders and how and to whom the audit quality indicators should be communicated.

The Kendallville Bank Case Study explores potential material fraud at a fictitious regional bank. With a plot revolving around the questionable accounting decisions of a star executive, this hypothetical scenario is designed to foster a greater understanding of the importance of exercising skepticism in the financial reporting process at publicly traded companies.

Fornelli launched a social media day as #AuditorProud on Twitter during the second day of the conference.

307 is total number of #AuditorProud yrs by 11 @CroweHorwath_US partners #aicpasec conf. Thank u @TheCAQ #GoCrowe
– Crowe tweet from the conference

Mark Your Calendars

The 2016 AICPA National Conference on SEC and PCAOB Developments will be held Dec. 5 to Dec. 7, 2016.

Mark your calendars for next year: Dec. 5-7, 2016, back to Mon-Wed slot. #AICPASEC @CroweHorwath_US will be there!
– Crowe tweet from the conference

Staci Shannon contributed to this publication.