The Securities and Exchange Commission will take quick action on what it learns at this week’s SEC Roundtable on Implementation of Internal Control Reporting Provisions. That’s the pledge of Donald Nicolaisen, chief accountant of the SEC, in a written statement preceding the event.
“Because many registrants are or soon will be evaluating their internal control processes for 2005 and integrated audits are or soon will be planned and organized, we intend to act expeditiously on what we learn,” Nicolaisen said. “We intend to consider the feedback we receive carefully and evaluate whether there is additional guidance we can provide that benefits investors while—where possible—lowering the cost for companies.”
The Roundtable takes place April 13, 9 a.m. to 5:30 p.m., at SEC headquarters in Washington, D.C. The SEC has assembled a panel of more than 50 professionals to help moderate the discussions. The panel list cuts across all fields to include corporate management and board members, attorneys, accountants, investors, association executives, and even a member of Congress (see details, agenda and participants in box at right).
The Roundtable agenda describes six separate panel discussions to address the first year of internal control reporting, an analysis of management’s reporting on internal controls, planning and design of the internal control reporting process, documentation and testing, the judgment latitude management and auditors exercise in the reporting process, and recommended next steps.
The SEC is accepting comments in advance of the Roundtable; so far, nearly 200 letters appear on the SEC Web site from a wide variety of individuals and organizations. The Roundtable is open to the public on a first-come, first-serve basis.
FASB: Costs To Dispose Assets Must Be Projected As Liability
The Financial Accounting Standards Board has issued its final interpretation on asset retirement obligations, requiring companies to book projected liabilities associated with future asset disposal. The ruling means companies will be required to calculate what they think it will cost to dispose of assets in the future and show the projected cost as a liability on its financial statement.
Neuhausen
FASB issued the interpretation to put to rest differences in accounting that developed after it issued Statement 143 Accounting for Asset Retirement Obligations in 2001, said Ben Neuhausen, national director of accounting for BDO Seidman. Most companies have interpreted the 2001 rule to mean they would only book the liability when a trigger event occurs that makes the cost of disposal more certain, he said.
The rule applies most commonly to asbestos removal and cell phone towers, Neuhausen said, but it likely is applicable in other fields such as steel, or oil and gas. If a company owns a building containing asbestos, its removal according to environmental rules will subject the company to some future cost, but the timing and actual cost may not be known in the current period. FASB’s recent interpretation requires companies to make some assumptions about when and at what cost asbestos would be removed and book the liability.
As for cell phone towers, Neuhausen said most companies have long-term agreements for the placement of towers, but that most of those agreements provide for eventual removal of the tower. Likewise, FASB says companies must book that removal cost, even if there’s some chance the agreement might be renewed and the tower would remain in place.
In other FASB action, the Board issued a proposed staff position that would clarify how companies should treat stock options as they relate to derivatives, and the Board has decided to take up a new project to study risk transfer in insurance. The accounting treatment of insurance and risk transfer has gone under the microscope as federal investigations into accounting scandals continue.
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