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AICPA'S SPECIAL COMMITTEE ON FINANCIAL REPORTING COMPLETES INITIAL RESEARCH

 NEW YORK, Sept. 20 /PRNewswire/ -- The Special Committee on Financial Reporting of the American Institute of Certified Public Accountants (AICPA) announced today at the AICPA Council meeting in New Orleans, that it has completed the initial research phase of a major project to develop recommendations to improve financial reporting in the United States. The final report of the special committee, expected by late spring 1994, will include recommendations that, is acted upon by standard setters, would be responsive to what users -- investors, creditors and their advisors -- say they need to make investment and credit decisions.
 Since its formulation by the AICPA board of directors in the spring of 1991, the special committee has conducted an unprecedented, comprehensive research effort -- including an extensive literature search, commissioned research by academics and intensive face-to-face discussions with representative groups of investors, creditors and their advisors -- to determine the information needs of today's financial statement users. According to Edmund L. Jenkins, Arthur Andersen partner and chairman of the special committee, "Our research indicates the critical needs of investors and creditors are not being met by the current system of financial reporting. We are considering ways that financial reporting can be more responsive to meeting those needs, but no decisions have been made at this time."
 Users have told the committee that they need better "disaggregated" or "segment" information based on the way management manages its business and on a geographic basis, better information about the "sustainable earnings" capacity of the company, nonfinancial information that assist in evaluating a company's future prospects, including information about significant opportunities and risks, and a more flexible auditors' report that would provide qualitative commentary that would assist in evaluating the quality of a company's earnings.
 "In developing recommendations," Jenkins stated, "the special committee will be mindful of cost/benefit consideration, including competitive and legal concerns. The committee has concluded that information that would harm a company's competitive position should not be presented and that there must be a legal safe-harbors related to the disclosure of forward-looking information."
 Since the special committee is not a standard setting body, implementation of its recommendations will require action by authoritative standard-setting bodies such as the Financial Accounting Standards Board (FASB), the AICPA's Accounting Standards Executive Committee (AcSEC) and Auditing Standards Board (ASB), and the Securities and Exchange Commission (SEC).
 The special committee includes senior representatives from 11 accounting firms -- large, medium-size and smaller firms, two senior representatives from the business community and a well-known academic. A member of the FASB and a member for the SEC staff observe committee meetings.
 The AICPA is the national professional organization of CPAs with more than 310,000 members in practice, industry, government and education.
 -0- 9/20/93
 /NOTE TO EDITORS: The full text of Ed Jenkins' speech to the AICPA Council is available through contact./
 /CONTACT: Barbara Sands of AICPA, 212-596-6107/


CO: American Institute of Certified Public Accountants ST: New York IN: SU:

PS-SM -- NY053 -- 3657 09/20/93 12:04 EDT
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Publication:PR Newswire
Date:Sep 20, 1993
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