Many Companies Unprepared For Financial Reporting Changes

Four in 10 U.S. multinational companies will not be able to meet the Securities and Exchange Commission's (SEC) accelerated quarterly and annual corporate reporting requirements without significant internal changes in procedure, according to a PricewaterhouseCoopers' Management Barometer survey. Another 50% expect to meet all requirements. The new SEC rules, to be phased in over the next two fiscal years, ultimately require companies' quarterly reports to be filed 35 days after a quarter's end, and annual reports to be filed 60 days after year-end. Currently, companies are allowed 45 days for the quarterly 10-Q reports and 90 days for the annual 10-K. To meet the new regulations, 59% say they will use their existing reporting systems more effectively; 29% will upgrade their reporting systems; and 8% will make significant investments in new information technology. "Companies will need faster and better-managed month-end closing procedures to meet the new timetables, says PricewaterhouseCoopers Partner, Tom Watson. "The SEC has been pushing for accelerated filings as a way to improve investor confidence in the wake of corporate and accounting scandals. As the SEC focuses in on speed, it will also expect management to provide higher levels of accuracy in the numbers, to display a better understanding of the results, and to communicate those results in much richer detail."