denver Public Dialogue
April 26, 2007

Welcome to the inaugural newsletter from the Center for Audit Quality (CAQ), designed to keep you up-to-date each month on ways the organization is addressing the topic of modernizing business reporting, and other critical issues facing investors, issuers, company executives and the public company auditing profession.

Last month the CAQ launched its nationwide public dialogue tour. These dialogues, the first of which took place in Denver, Colo., on April 26, bring together investors, regulators, academics and company officials to discuss the future of business reporting – and the role of public company auditing – to ensure that reported information remains useful to investors and the capital markets. Our next dialogue will be in Charlotte, N.C., on May 15. Public dialogue events require pre-registration with the CAQ and are capacity permitting.

In Denver, our panelists included George A. Sissel, former Chairman and Chief Executive Officer, Ball Corporation; Lynn Turner, Managing Director of Research, Glass Lewis & Co.; George B. Curtis, Regional Director, Central Region, Securities and Exchange Commission; Dessa M. Bokides, former Executive Vice President and Chief Financial Officer; ProLogis; and Karen L. Newman, Dean, Daniels College of Business, University of Denver.

Participants in the event included local stakeholders in the reporting process – large and small preparers, regulators and standards setters, investors and other users of corporate disclosures, and the accounting profession, among others.

Some participants on the panel and in the audience said investors need more transparent and timely access to important business information from publicly traded companies.

"We need access to accurate information across the board," Newman said. "Financial reporting focuses on the past, and it is not yet very sophisticated in telling us 'where the puck is going.' That might involve a completely different way of looking at financial reporting."

Curtis added what he saw as another need — consistency: "I think an investor wants to be treated fairly and when looking at a company wants to have some data that he or she can use on a consistent basis…"

One of the major themes that emerged from the panel was the huge quantity of financial information now available to the public and the complexity of financial reports loaded with legal caveats.

To this end, Sissel noted, "Financial statements these days are so complex, so arcane that [the investor] needs an intermediary expert between the company and that person. Some companies give guidance, some companies give guidance with a great disclaimer, and some companies refuse to do it because they'll be held to it."

Turner added he believes it's unrealistic to expect investors “already working 40 hours a week" to take the time to learn and keep up with the changing intricacies of financial reporting. "When we talk about who is using these financial statements, it doesn't include the vast majority of the 90 million Americans who invest in capital markets,” Turner said.

This is just the type of conversation we hope to develop over the next year as the CAQ travels to other U.S. cities. At the end of the public dialogue, we'll undertake a broader, long-term effort to identify and suggest courses of action to enhance our reporting system and ensure it remains relevant, reliable and strong. We will compile the common themes and suggestions into a report, which we will share with regulators, lawmakers and others interested in the capital markets.

To see video excerpts from the Denver event and future public dialogue tours, please visit our Web site at www.thecaq.org. Also, please visit our Open Forum Web page to post your comments about modernizing financial reporting.