Mary Schapiro, chairman of the Securities and Exchange Commission, is drafting a letter to respond to a half dozen U.S. senators who are urging the SEC to do something more about off-balance-sheet accounting maneuvers.

Led by Robert Menendez, a Democrat from New Jersey who serves on the Senate Committee on Finance, the half dozen senators sent Schapiro a letter imploring the SEC to leverage more authority given under Sarbanes-Oxley to require more reporting of off-balance-sheet activities. “While the SEC did issue rules on off-balance-sheet activity pursuant to Sarbanes-Oxley, we are troubled that despite these rules, widespread off-balance-sheet accounting arrangements allowed large financial firms to hide trillions of dollars in obligations from investors, creditors, and regulators,” the senators wrote.

The senators point out some disturbing revelations that they say accounting and disclosure rules permitted to occur off balance sheet—some $1.1 trillion in assets reportedly kept off the books at Citigroup, an investment value plunge of 60 percent in one day for State Street shareholders amid market turmoil in early 2009, and the infamous “Repo 105” transactions at Lehman Brothers that allowed some $50 billion in debt to remain hidden from investors.

The senators call on Schapiro to require companies to disclose period-ending and daily average leverage ratios in quarterly and annual reports, rather than allowing companies to stage attractive period-end snapshots of the company’s financial condition. In addition to enforcement for those who have bent and broken rules, the senators call on the SEC to “put in place these rules that will make it harder for companies to mislead investors and creditors in the future.”

SEC spokesman John Nester said the SEC couldn’t comment on the senators’ letter in advance of a formal response from the chairman. He added, however, “We share the senators’ interest in high-quality disclosure and accounting.”

In 2009, the Financial Accounting Standards Board finalized new standards—Accounting Standards Update No. 2009-17 and No. 2009-16—that took effect with the 2010 reporting year intended to require companies to bring more of their assets parked in certain special purpose entities onto corporate balance sheets.

FASB also opened a project recently to look at the accounting for repurchase agreements, the area that Lehman Brothers bent to the point of breaking to achieve its off-balance-sheet treatment of certain transactions as it spun closer to bankruptcy.