UPDATING REGULATION S-XBy
The U.S. Securities & Exchange Commission (SEC) has targeted elements of Regulation S-X as part of its financial reporting reform effort. The initial effort will be directed at Rule 3-05, Financial Statements of Businesses Acquired or to be Acquired; Rule 3-09, Separate Financial Statements of Subsidiaries Not Consolidated and 50 Percent or Less Owned Persons; Rule 3-10, Financial Statements of Guarantors and Issuers of Guaranteed Securities Registered or Being Registered; and Rule 3-16, Financial Statements of Affiliates Whose Securities Collateralize an Issue Registered or Being Registered.
As the SEC moves forward with updating the standards, the question still to be answered is who will be the key beneficiary: the companies that prepare the statements or the investors who use them? The CFA Institute’s 2013 Financial Reporting Disclosures: Investor Perspectives on Transparency, Trust, and Volume states that investors are less concerned about the complexity and volume of required statements and more concerned about transparency. That seemed to be a riposte to then-SEC Chairman Mary Jo White’s occasional concerns about “information overload.”