Today SEC issued cautionary advice to remind company management, auditors, audit committees, and their advisors that investors increasingly deserve and demand full transparency of accounting policies and their effects in the annual reports that public companies are required to file with us. Accordingly, the selection and application of a company's accounting policies used when preparing these reports must be appropriately reasoned.
SEC intends to consider new rules during the coming year to elicit more precise disclosures about the accounting policies that company management believes are most "critical" - important to the portrayal of a company's condition and results, and requiring management's most difficult, subjective or complex judgments.
The Commission's cautionary advice can be accessed on the SEC website at www.sec.gov/pdf/33-8040.pdf.
