Evidence may soon emerge revealing whether or not Lehman Brothers was an outlier in classifying asset repurchase agreements as sales even when those assets were destined to return to the balance sheet.

The Securities and Exchange Commission is reviewing information it has received so far from 19 major financial institutions who were asked to describe in full detail how they typically treat repurchase agreements and securities lending transactions, or other transactions involving an obligation to repurchase the transferred assets. At Compliance Week 2010 this week in Washington, SEC’s Steven Jacobs, associate chief accountant in the Division of Corporation Finance, said responses from the 19 institutions are going through the usual, back-and-forth comment letter process, and the responses will be made public 45 days after that process is complete.

Jacobs provided little detail about what the responses contain so far, but he made it clear the SEC is digging deep. “A lot of the banks we looked at said they generally account for these as collateralized borrowings,” he said. “From the CorpFin perspective, I think that word ‘generally’ tends to raise suspicions.” That is leading the staff to ask for more information about the circumstances that lead institutions to account for repurchase agreements as collateralized borrowings or something else, he said.

Even further, the process already has the staff thinking about new guidance or rulemaking that might be warranted. “We’re going to continue to think about whether the disclosure requirements are adequate,” he said. “There may be more staff guidance coming down the road, or possibly rulemaking, so stay tuned for that.”

The SEC sent its letter calling for information on how financial institutions handle the accounting for repurchase agreements after the examiner in Lehman’s bankruptcy proceedings published its report describing aggressive accounting maneuvers. The report said Lehman, with the blessing of its auditor and overseas law firm, accounted for as much as $50 billion in repurchase agreements as sales to shuffle debt off the balance sheet at key intervals in the financial reporting cycle.

“The overall message we’re trying to communicate as a result of this process is that companies really need to focus on their disclosures,” said Jacobs. “In a situation like this, the balance sheet is a snapshot in time.” Disclosures should more clearly describe the company’s economic situation and its liquidity apart from the moment-in-time snapshot, he said. “I would be willing to bet companies would be more willing to do that if that position on the balance sheet didn’t look as good.”