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Chair's corner.

I want to share with you a moment of pride for me on behalf of our profession when I attended the AICPA National Conference on Current SEC and PCAOB Developments last Dec. Securities and Exchange Commission Chairman Christopher Cox was one of the speakers and told of his strong appreciation and respect for CPAs and the important role we play in today's complex financial environment. Here is a brief summary of his comments that you all will appreciate.

"A growing economy needs the accounting profession," said Cox. "That was just as true in the 19th century as it is in the 21st." He pointed to CPAs' "solid reputation among the public, and among business decision makers." He noted that "business executives--your clients--give you a favorability rating of 95%. At the SEC, where we're focused on investor protection, we're most impressed that investors give you a favorability rating of 97%. That's as close to perfect as you're likely to get in this life."

Chairman Cox praised the profession's leadership on many fronts, and pointed to one development--XBRL or eXtensible Business Reporting Language--as an "extraordinarily important initiative that the AICPA is helping to lead." The chairman is clearly excited about XBRL because of all it will do for the business community and financial reporting. "The interactive data that this initiative will create will lead to vast improvements in the quality, timeliness and usefulness of information that investors get about the companies they're investing in," he said. "Interactive data will give SEC analysts better tools to detect fraud. It can make it easier, less expensive, and less time consuming for companies--and their accountants--to comply with SEC reporting requirements.... With interactive data, it would be possible for a significant part of the 404 work to be automated."

Chairman Cox has predicted that interactive data or XBRL will in very short order be a part of every public company's business reports. As reported in last month's CPA Letter, the SEC continues to promote XBRL use and is offering incentives to companies investigating the use of interactive data. Companies that join the SEC's interactive data test group, for example, will receive quicker reviews of their registration statements or annual reports. And the SEC isn't the only regulatory agency to recognize the value of XBRL. The Internal Revenue Service has just joined the XBRL consortium and is one of 28 other tax regulators around the world that have endorsed XBRL.

It is amazing to remember that XBRL started as the brainchild of one CPA and has since grown into something that is changing international business. CPAs are essential to the business reporting process, and the accounting profession and the AICPA have been pivotal in the creation and continued development of XBRL (www.xbrl.org). XBRL represents a move toward greater transparency of financial reporting, which is one reason the AICPA has been an active participant in the technology's evolution. It is quickly being adopted as a standard means of communicating business and financial information between companies and on the Internet throughout the world.

XBRL is transforming business reporting and the AICPA remains committed to working toward its widespread adoption. The SEC's endorsement of XBRL will help us achieve that.

I am proud to be part of the accounting profession as we continue to exercise leadership and take positions on important public interest initiatives in the business world. As Chairman Cox noted, XBRL is an excellent example of the many ways that the profession continues to foster change. To read Cox's speech on the profession and its work with XBRL, visit www.sec.gov/news/speech/spch120505cc.htm.

[contact] Leslie.Murphy@plantemoran.com
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Author:Murphy, Leslie
Publication:CPA Letter
Date:Apr 1, 2006
Words:605
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