Top officials of the Securities and Exchange Commission’s office of the chief accountant on Monday cited constraints on the OCA’s resources in the face of advancing technology and an abundance of new accounting rules.
Speaking at an American Institute of Certified Professional Accountants conference in Washington, SEC chief accountant Wesley R. Bricker cited the “the ongoing efforts of the fewer than 50 employees in OCA” who “promote robust financial reporting and audits that are critical to safeguarding millions of investors, facilitating the ability of thousands of companies to raise capital, and instilling confidence in the integrity of our multi-trillion-dollar U.S. capital markets.”
Bricker went on to cite his office’s work “with the more than 1,000 professionals who collectively serve” at the Financial Accounting Standards Board, the International Accounting Standards Board, and the Public Company Accounting Oversight Board.
Because “OCA is responsible for covering much ground across financial reporting and auditing,” he said, its officials “must constantly assess whether we are allocating our finite resources appropriately to address the most significant financial reporting risks and in the most effective manner, keeping front of mind the need for financial reporting to respond to the ever changing needs of investors.”
In a later panel discussion, OCA deputy chief accountant Julie Erhardt discussed the staffing challenges the office is facing in trying to develop regulatory policies to keep up with technological innovations such as bitcoin.
But the problem remains that the accounting regulators have a day job that limits the time they can spend tackling new technological issues. “Where are we going to get the time to dig into them” at the same time OCA is focused on existing standards and the influx of new ones such as those governing revenue recognition, lease accounting, and current expected credit losses? Ehrhardt asked.
“At OCA, our resources are finite,” she said.
To get more out of its existing staff, OCA finds it productive to assign one person with a block of free time to take the lead on an innovation effort, Ehrhardt added. “If you don’t have a block of free time, it will basically be a hobby,” she said.
A good approach used by the SEC in explaining new technology issues to a group — and one that can be useful to corporate accountants and auditors — is a “three-minute thesis exercise,” according to Ehrhardt. In such an exercise, a staff member gains expertise on an issue, boils it down into a three-minute presentation to the group, and takes questions.
OCA also finds it profitable to attack innovation efforts through limited “surges,” rather than as limitless projects, according to the accounting rule maker. When such projects are unlimited, “it’s hard to get people excited,” she added.