The Securities and Exchange Commission needs to guard against laxity in the aftermath of the Dodd-Frank Act, the SEC's Financial Reporting and Audit Task Force vice chair warned today.
“It is easy for regulators to take the foot off the gas after legislation, but that type of rest can be costly,” Margaret McGuire told a Washington, D.C. Bar Association meeting.
Among the aims of the task force is to help prevent a letdown in enforcement and to spot financial reporting and auditing problems before they become headline grabbing issues, she said.
She noted her unit is coordinating with the asset management section of the SEC’s Enforcement Division to aid with the financial reporting oversight of investment companies.
McGuire said she doesn’t know if there is less financial fraud going on or if the agency isn’t discovering it. However, she said the number of financial filing restatements by public companies has fallen dramatically since the Sarbanes-Oxley Act of 2002, which, among other things, required that executives individually certify the accuracy of a company's financial disclosures.
Russell Ryan, former SEC enforcement assistant director, said the SEC can take a bow for becoming a deterrence to fraud along with Sarbanes-Oxley.
“They’ve woken up public companies and boards which have become much more focused on compliance. The fact is the SEC is not filing as many financial fraud cases as it used to," he said.