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American Institute of Certified Public Accountants. Committee on Relations With SEC

Rappaport, Louis H.

English

eGrove (Univ. of Mississippi)

University of Mississippi eGrove Association Sections, Divisions, Boards, Teams American Institute of Certified Public Accountants (AICPA) Historical Collection 4-1958 Midyear Report of Committee on Relations With SEC, To the Members of the Council of the American Institute of Certified Public Accountants, April 1958 Louis H. Rappaport American Institute of Certified Public Accountants. Committee on Relations With SEC Follow this and additional works at: https://egrove.olemiss.edu/aicpa_assoc  Part of the Accounting Commons Recommended Citation Rappaport, Louis H. and American Institute of Certified Public Accountants. Committee on Relations With SEC, "Midyear Report of Committee on Relations With SEC, To the Members of the Council of the American Institute of Certified Public Accountants, April 1958" (1958). Association Sections, Divisions, Boards, Teams. 1508. https://egrove.olemiss.edu/aicpa_assoc/1508 This Book is brought to you for free and open access by the American Institute of Certified Public Accountants (AICPA) Historical Collection at eGrove. It has been accepted for inclusion in Association Sections, Divisions, Boards, Teams by an authorized administrator of eGrove. For more information, please contact egrove@olemiss.edu. MIDYEAR REPORT OF COMMITTEE ON RELATIONS WITH SECTo the Members of the Council of the American Institute of Certified Public AccountantsGentlemen:The attention of the committee on relations with SEC has been directed, since its report last fall, to three areas of interest to the accounting profession: the Fulbright bill, which would bring certain unlisted companies under SEC regulation for the first time; the SEC’s proposal to revise Rule 2.01 of its Regulation S-X; and discussion of questions of mutual interest with representatives of the SEC staff.The first of the two meetings held by the committee during the period of this report was held on December 4. It was devoted entirely to a consideration of the Fulbright bill, with particular reference to SEC regulation of financial reporting, solicitation of proxies, and insider trading rules involving short-swing profits, etc., and to whether the Institute should take a public position with respect to the bill. Recommendations on these points were drafted and submitted to the executive committee for its consideration.On January 28, the Securities and Exchange Commissionissued a notice of proposal to amend Rule 2.01 of RegulationS-X regarding accountants’ independence. Briefly, theproposed amendment is intended to eliminate the absolute prohibition of any Indirect financial interest in the registrant or any of its parents or subsidiaries and any direct financial interest in other affiliates of the registrant, and to substitute the test of materiality therefor. The prohibition against any direct financial interest in the registrant or any of its parents or subsidiaries and certain other disqualifying connections have been retained in the proposed revision.Members of the committee submitted comments on the proposal to the technical services department, which summarized them and submitted them to the chief accountant of the SEC. The committee members expressed general approval of the proposal, but a number of suggestions were made for clarification of specific points.The second of the committee’s meetings was held on March 21 in Washington, D. C. with representatives of the SEC staff. As usual in these meetings, the discussions covered a wide range of topics of mutual Interest; including, in addition to the proposed revision of Rule 2.01, experience with Accounting Research Bulletin No. 47 on Accounting for Costs of Pension Plans, the proposed revision of Accounting Research Bulletin No. 44 on Declining-balance Depreciation, SEC Accounting Series Release No. 53 relating to allocation of income taxes, "net of taxes" treatment of reserves,- 2 -consolidation of companies less than majority-owned, valuation of lifo inventories when cost exceeds marketpresentation of stock dividends declared before the balance- sheet date, netting U. S. Bonds against taxes under Chapter 3(B) of Accounting Research Bulletin No. 43, audit requirements relating to brokers and dealers in securities, and micro­filming of records of such brokers and dealers.While these discussions with the SEC staff are largely  exploratory in nature, the committee believes that the exchanges of viewpoints that take place are helpful to the accounting profession and to the SEC, and that they contribute significantly to the understanding that exists between them.Respectfully submitted,Louis H. Rappaport, Chairman Committee on Relations with SECApril, 1958- 3 -

Midyear Report of Committee on Relations With SEC, To the Members of the Council of the American Institute of Certified Public Accountants, April 1958

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Midyear Report of Committee on Relations With SEC, To the Members of the Council of the American Institute of Certified Public Accountants, April 1958

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