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Dec. 5 — Deficiencies in companies’ internal controls over their financial reporting can lead to restatements and higher investment costs, the SEC’s top accountant warned.
Wesley Bricker, the Securities and Exchange Commission’s chief accountant, said Dec. 5 that over the next several years, updating and maintaining sound internal controls over financial reporting “will be particularly important” as major new accounting standards take effect.
Revenue reporting rules that the Financial Accounting Standards Board released in 2014 become effective for public companies in 2018. In succeeding years, companies will shift to new FASB standards on leases and accounting for loan and other credit losses.
Bricker, who spoke at a conference of the American Institute of CPAs, joined other SEC officials and leaders of the Public Company Accounting Oversight in focusing at least briefly on internal controls, or ICFR, at the event.
“It is hard to think of an area more important than ICFR to our mission of providing high-quality financial information that investors can rely on,” Bricker said. Companies’ efforts to apply new rules “will require careful planning and execution, as well as sound judgment from management,” he said.
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The text of Bricker’s speech is available at https://www.sec.gov/news/speech/keynote-address-2016-aicpa-conference-working-together.html
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