Update: SEC's Financial Reporting And Audit Task Force

On February 11, Margaret McGuire, Vice Chair of the US Securities and Exchange Commission's (SEC) Financial Reporting and Audit Task Force (Task Force), participated in a DC Bar panel discussion to review the objectives, administration and early initiatives of the Task Force since its formation was announced by the SEC last July.¹ Below is a summary of some of the key points that emerged from McGuire's comments.

The SEC's Objective in Creating the Task Force

McGuire explained that the Task Force's goal is to catch financial reporting fraud at an earlier stage than in the past. McGuire noted that the number of financial reporting enforcement actions had dropped, as had the number of pure restatements, but suggested that this trend may reflect the SEC's failure to discover latent instances of fraud, as opposed to fewer instances of fraud. McGuire also acknowledged an increased focus on these issues by companies, audit committees and accounting firms.