Earlier today, Financial Executives International (FEI) issued a press release announcing the selection of FEI's 2010 Hall of Fame inductees: Karl M. von der Heyden, former Vice Chairman of the Board of Directors and Chief Financial Officer of PepsiCo, Inc., and Ulyesse J. LeGrange, retired Senior Vice President and Chief Financial Officer of ExxonMobil Corporation's U.S. Oil and Gas Operations.
As noted in the press release: "The FEI Hall of Fame [HOF] provides recognition to senior financial executives who have epitomized the performance, leadership and integrity of the most exemplary financial professionals throughout their careers and in doing so, have made significant contributions to the betterment of their respective organizations and to the finance profession as a whole."
This year's inductees will be formally honored during at the FEI HOF black-tie gala on Nov. 15, 2010 at the New York Palace. The program will be hosted by CNBC's Tyler Matisen. All proceeds from the 5th Annual HOF Gala benefit the work of Financial Executives Research Foundation (FERF) , the research affiliate of FEI. Additional information about the FEI HOF, including further background on this year's inductees, past inductees, and how to register to attend the black-tie gala, can be found at http://www.feihall.org/.
FERF appreciates the support of Microsoft Corporation, premier sponsor of the HOF. Additional sponsorship opportunities are available, contact Lorna Raagas at lraagas@financialexecutives.org or 973.765.1033 for info.
CFRI Is Coming!
The black-tie gala HOF induction ceremony, Nov. 15, 2010, is a separate event from FEI's well-known Current Financial Reporting Issues (CFRI) conference, slated to take place Nov. 15-16 at the Marriott Marquis Hotel in NYC; and each event (HOF and CFRI) requires separate registration and payment. The programs are scheduled during the same time period and city for the convenience of attendees interested in attending both programs.
Further info about this year's CFRI (speakers, agenda) will be posted as we get closer to the date. Past speakers have included SEC, FASB, IASB and PCAOB Chairmen, Commissioners, Board Members, and Senior Staff, and well-known business, finance, and economics news, and other commentators. Some highlights from last year's CFRI were posted last year here, here, here, and here, but there's nothing like being there in person, both to see the expressions on the faces of the speakers (including when some very high level people tell jokes! -- and their reactions to some of the questions during Q&A! -- plus no matter how comprehensive a set of notes you take or articles you read about the conference, it can't compare to hearing it all yourself, first-hand), and for the opportunity to network with other high level financial executives, members of their staff, and others (the program is open to non-FEI members at a higher registration rate). Potential new members: see Join FEI; past members can renew membership by logging in here.
Wednesday, July 7, 2010
Thursday, July 1, 2010
FASB, IASB Release 'Staff Draft' of Proposal on Financial Statement Presentation
In a special "Action Alert" issued earlier today, FASB and the IASB announced the release of a "Staff Draft" of their upcoming Exposure Draft of significant proposed changes to financial statements, as part of the Financial Statement Project.
The boards note in today's announcement that outreach activities they plan to issue the ED in early 2011, and plan to engage in the outreach activities during the next six months, focusing on two areas:
1. The perceived benefits and costs of the proposals
2. The implications of the proposals for financial reporting by financial services entities.
In particular, the staff plans to:
1. Ask users of financial statements to evaluate how the proposed changes to the organization of, and information presented in, financial statements would benefit their analysis and resource allocation decisions.
2. Ask preparers of financial statements to evaluate the effort and cost involved in adopting these proposed changes in their unique circumstances.
3. Meet with preparers and users of the financial statements of financial services entities to discuss the proposed changes.
4. Gather additional information about benefits and costs by doing more field work on the proposals in the staff draft, including additional field testing, experimental research, or both.
As to timing of release of the actual Exposure Draft (ED), FASB and the IASB say they expect to publish the Exposure Draft (ED) in early 2011.
While an "Staff Draft" is not a formal request for comment (as opposed to the release of a formal Exposure Draft or ED), today's FASB/IASB announcement adds:"While neither the FASB nor the IASB is formally inviting comments, they welcome input from interested parties.
Links to Staff Draft, Related Info
Introduction to the Staff Draft (9 pages)
Staff Draft of an Exposure Draft on Financial Statement Presentation (155 pages)
The boards note in today's announcement that outreach activities they plan to issue the ED in early 2011, and plan to engage in the outreach activities during the next six months, focusing on two areas:
1. The perceived benefits and costs of the proposals
2. The implications of the proposals for financial reporting by financial services entities.
In particular, the staff plans to:
1. Ask users of financial statements to evaluate how the proposed changes to the organization of, and information presented in, financial statements would benefit their analysis and resource allocation decisions.
2. Ask preparers of financial statements to evaluate the effort and cost involved in adopting these proposed changes in their unique circumstances.
3. Meet with preparers and users of the financial statements of financial services entities to discuss the proposed changes.
4. Gather additional information about benefits and costs by doing more field work on the proposals in the staff draft, including additional field testing, experimental research, or both.
As to timing of release of the actual Exposure Draft (ED), FASB and the IASB say they expect to publish the Exposure Draft (ED) in early 2011.
While an "Staff Draft" is not a formal request for comment (as opposed to the release of a formal Exposure Draft or ED), today's FASB/IASB announcement adds:"While neither the FASB nor the IASB is formally inviting comments, they welcome input from interested parties.
Links to Staff Draft, Related Info
Introduction to the Staff Draft (9 pages)
Staff Draft of an Exposure Draft on Financial Statement Presentation (155 pages)
Monday, June 28, 2010
Supreme Court Decides PCAOB Violates Separation of Powers, But Recommends a Cure
Earlier today, the U.S. Supreme Court issued its opinion in the Free Enterprise Fund et al. v. Public Company Accounting Oversight Board et al. case, which turns on whether the PCAOB, created as part of the Sarbanes-Oxley Act of 2002, violates the U.S. Constitution's appointments clause.
Here are some highlights from the 5-4 ruling today, (Commissioner Breyer dissenting), in which the Supreme Court stated:
Held:
1. The District Court had jurisdiction over these claims......
2. The dual for-cause limitations on the removal of Board members contravene the Constitution’s separation of powers. Pp. 10–27....
.....(d)The Government errs in arguing that, even if some constraints on the removal of inferior executive officers might violate the Constitution, the restrictions here do not. There is no construction of the Commission’s good-cause removal power that is broad enough to avoid invalidation. Nor is the Commission’s broad power over Board functions the equivalent of a power to remove Board members. Altering the Board’s budget or powers is not a meaningful way to controlan inferior officer; the Commission cannot supervise individual Board members if it must destroy the Board in order to fix it. Moreover, the Commission’s power over the Board is hardly plenary, as the Boardmay take significant enforcement actions largely independently ofthe Commission. Enacting new SEC rules through the required no-tice and comment procedures would be a poor means of micro-managing the Board, and without certain findings, the Act forbidsany general rule requiring SEC preapproval of Board actions. Finally, the Sarbanes-Oxley Act is highly unusual in committing sub-stantial executive authority to officers protected by two layers ofgood-cause removal. Pp. 21–27.
3. The unconstitutional tenure provisions are severable from the remainder of the statute.
Because “[t]he unconstitutionality of a partof an Act does not necessarily defeat or affect the validity of its re-maining provisions,” Champlin Refining Co. v. Corporation Comm’n of Okla., 286 U. S. 210, 234, the “normal rule” is “that partial . . . in-validation is the required course,” Brockett v. Spokane Arcades, Inc., 472 U. S. 491, 504. The Board’s existence does not violate the sepa-ration of powers, but the substantive removal restrictions imposed by§§7211(e)(6) and 7217(d)(3) do. Concluding that the removal restric-tions here are invalid leaves the Board removable by the Commissionat will. With the tenure restrictions excised, the Act remains “ ‘fullyoperative as a law,’ ” New York v. United States, 505 U. S. 144, 186, and nothing in the Act’s text or historical context makes it “evident”that Congress would have preferred no Board at all to a Board whosemembers are removable at will, Alaska Airlines, Inc. v. Brock, 480 U. S. 678, 684. The consequence is that the Board may continue to function as before, but its members may be removed at will by the Commission. Pp. 27–29.
4. The Board’s appointment is consistent with the AppointmentsClause. Pp. 29–33.
(a)The Board members are inferior officers whose appointment Congress may permissibly vest in a “Hea[d] of Departmen[t].” Infe-rior officers “are officers whose work is directed and supervised atsome level” by superiors appointed by the President with the Senate’s consent. Edmond v. United States, 520 U. S. 651, 662–663. Because the good-cause restrictions discussed above are unconstitutional andvoid, the Commission possesses the power to remove Board membersat will, in addition to its other oversight authority. Board members are therefore directed and supervised by the Commission. Pp. 29–30.
(b)The Commission is a “Departmen[t]” under the AppointmentsClause. Freytag v. Commissioner, 501 U. S. 868, 887, n. 4, specifi-cally reserved the question whether a “principal agenc[y], such as”the SEC, is a “Departmen[t].” The Court now adopts the reasoning of the concurring Justices in Freytag, who would have concluded that the SEC is such a “Departmen[t]” because it is a freestanding compo-nent of the Executive Branch not subordinate to or contained within any other such component. This reading is consistent with the com-mon, near-contemporary definition of a “department”; with the earlypractice of Congress, see §3, 1 Stat. 234; and with this Court’s cases,which have never invalidated an appointment made by the head ofsuch an establishment. Pp. 30–31.
(c)The several Commissioners, and not the Chairman, are the Commission’s “Hea[d].”
The Commission’s powers are generallyvested in the Commissioners jointly, not the Chairman alone. The Commissioners do not report to the Chairman, who exercises admin-istrative functions subject to the full Commission’s policies. There is no reason why a multimember body may not be the “Hea[d]” of a“Departmen[t]” that it governs. The Appointments Clause necessarily contemplates collective appointments by the “Courts of Law,” Art. II, §2, cl. 2, and each House of Congress appoints its officers col-lectively, see, e.g., Art. I, §2, cl. 5. Practice has also sanctioned the appointment of inferior officers by multimember agencies. Pp. 31–33.
537 F. 3d 667, affirmed in part, reversed in part, and remanded.
Additional Info
A summary of the ruling and addional analysis will be posted later today by our Washington DC office staff on our website, http://www.financialexecutives.org/.
The NYT has posted a brief article: Supreme Court Orders Changes to Sarbanes-Oxley Act (via the Associated Press).
Here are some highlights from the 5-4 ruling today, (Commissioner Breyer dissenting), in which the Supreme Court stated:
Held:
1. The District Court had jurisdiction over these claims......
2. The dual for-cause limitations on the removal of Board members contravene the Constitution’s separation of powers. Pp. 10–27....
.....(d)The Government errs in arguing that, even if some constraints on the removal of inferior executive officers might violate the Constitution, the restrictions here do not. There is no construction of the Commission’s good-cause removal power that is broad enough to avoid invalidation. Nor is the Commission’s broad power over Board functions the equivalent of a power to remove Board members. Altering the Board’s budget or powers is not a meaningful way to controlan inferior officer; the Commission cannot supervise individual Board members if it must destroy the Board in order to fix it. Moreover, the Commission’s power over the Board is hardly plenary, as the Boardmay take significant enforcement actions largely independently ofthe Commission. Enacting new SEC rules through the required no-tice and comment procedures would be a poor means of micro-managing the Board, and without certain findings, the Act forbidsany general rule requiring SEC preapproval of Board actions. Finally, the Sarbanes-Oxley Act is highly unusual in committing sub-stantial executive authority to officers protected by two layers ofgood-cause removal. Pp. 21–27.
3. The unconstitutional tenure provisions are severable from the remainder of the statute.
Because “[t]he unconstitutionality of a partof an Act does not necessarily defeat or affect the validity of its re-maining provisions,” Champlin Refining Co. v. Corporation Comm’n of Okla., 286 U. S. 210, 234, the “normal rule” is “that partial . . . in-validation is the required course,” Brockett v. Spokane Arcades, Inc., 472 U. S. 491, 504. The Board’s existence does not violate the sepa-ration of powers, but the substantive removal restrictions imposed by§§7211(e)(6) and 7217(d)(3) do. Concluding that the removal restric-tions here are invalid leaves the Board removable by the Commissionat will. With the tenure restrictions excised, the Act remains “ ‘fullyoperative as a law,’ ” New York v. United States, 505 U. S. 144, 186, and nothing in the Act’s text or historical context makes it “evident”that Congress would have preferred no Board at all to a Board whosemembers are removable at will, Alaska Airlines, Inc. v. Brock, 480 U. S. 678, 684. The consequence is that the Board may continue to function as before, but its members may be removed at will by the Commission. Pp. 27–29.
4. The Board’s appointment is consistent with the AppointmentsClause. Pp. 29–33.
(a)The Board members are inferior officers whose appointment Congress may permissibly vest in a “Hea[d] of Departmen[t].” Infe-rior officers “are officers whose work is directed and supervised atsome level” by superiors appointed by the President with the Senate’s consent. Edmond v. United States, 520 U. S. 651, 662–663. Because the good-cause restrictions discussed above are unconstitutional andvoid, the Commission possesses the power to remove Board membersat will, in addition to its other oversight authority. Board members are therefore directed and supervised by the Commission. Pp. 29–30.
(b)The Commission is a “Departmen[t]” under the AppointmentsClause. Freytag v. Commissioner, 501 U. S. 868, 887, n. 4, specifi-cally reserved the question whether a “principal agenc[y], such as”the SEC, is a “Departmen[t].” The Court now adopts the reasoning of the concurring Justices in Freytag, who would have concluded that the SEC is such a “Departmen[t]” because it is a freestanding compo-nent of the Executive Branch not subordinate to or contained within any other such component. This reading is consistent with the com-mon, near-contemporary definition of a “department”; with the earlypractice of Congress, see §3, 1 Stat. 234; and with this Court’s cases,which have never invalidated an appointment made by the head ofsuch an establishment. Pp. 30–31.
(c)The several Commissioners, and not the Chairman, are the Commission’s “Hea[d].”
The Commission’s powers are generallyvested in the Commissioners jointly, not the Chairman alone. The Commissioners do not report to the Chairman, who exercises admin-istrative functions subject to the full Commission’s policies. There is no reason why a multimember body may not be the “Hea[d]” of a“Departmen[t]” that it governs. The Appointments Clause necessarily contemplates collective appointments by the “Courts of Law,” Art. II, §2, cl. 2, and each House of Congress appoints its officers col-lectively, see, e.g., Art. I, §2, cl. 5. Practice has also sanctioned the appointment of inferior officers by multimember agencies. Pp. 31–33.
537 F. 3d 667, affirmed in part, reversed in part, and remanded.
Additional Info
A summary of the ruling and addional analysis will be posted later today by our Washington DC office staff on our website, http://www.financialexecutives.org/.
The NYT has posted a brief article: Supreme Court Orders Changes to Sarbanes-Oxley Act (via the Associated Press).
Subscribe to:
Posts (Atom)