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The Richard C. Adkerson Gallery on the SEC Role in Accounting Standards Setting
Origins of the Relationship
Substantial Authoritative Support
- 1936 Occupations Related to Mathematics
The early days of the SEC were marked by the increasingly difficult common-law development of accounting precedents – case by case. The notion of disclosure as acceptable alternative to correction had been painfully stretched in the Northern States Power case.
The securities laws gave the SEC the clear authority – if not mandate – to make rules and regulations governing registrant financial statements, including methods to be followed in the preparation of accounts. In the 1930s, a broad-based body of generally accepted accounting principles was embryonic, at best, and Chief Accountant Carman Blough had argued that the SEC had neither the time nor resources to develop accounting standards.
But an elegant solution was soon devised. In April 1938 a still-divided Commission issued an “administrative policy” for financial statements in Accounting Series Release No. 4, centered on the notion of whether there was substantial authoritative support for accounting practices.
If financial statements were prepared in accordance with principles for which there was no substantial authoritative support, the SEC would presume that the statements were misleading or inaccurate, despite disclosures. If the Commission differed with a registrant on an accounting practice, disclosure in lieu of correction would be accepted only if there were substantial authoritative support for the registrant’s practice and the SEC’s position had not been expressed previously in an official release, including opinions of its Chief Accountant. Registrants could no longer attempt to cure accounting deficiencies with disclosure.
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Related Museum Resources
Papers
- October 30, 1933
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transcript
pdf
(AICPA Collection, University of Mississippi)
- October 10, 1934
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transcript
pdf
(with permission of the John F. Kennedy Library Foundation)
- November 12, 1934
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transcript
pdf
(Courtesy of the Library of Congress)
- December 21, 1934
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transcript
pdf
(Courtesy of the National Archives)
- January 14, 1935
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transcript
pdf
(AICPA Collection, University of Mississippi)
- January 14, 1935
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transcript
pdf
(with permission of the John F. Kennedy Library Foundation)
- January 18, 1935
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transcript
pdf
(Courtesy of Stephen Zeff)
- March 19, 1935
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transcript
pdf
(Courtesy of the Library of Congress)
- June 4, 1935
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image
pdf
(with permission of the John F. Kennedy Library Foundation)
- January 18, 1936
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image
pdf
(Courtesy of the Library of Congress)
- February 13, 1936
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image
pdf
(Courtesy of the American Institute of Certified Public Accountants)
- January 8, 1937
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transcript
pdf
(AICPA Collection, University of Mississippi)
- January 11, 1937
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transcript
pdf
(Courtesy of the AICPA Library Collection, University of Mississippi)
- February 5, 1937
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transcript
pdf
(Courtesy of the American Institute of Certified Public Accountants)
- May 21, 1937
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transcript
pdf
(AICPA Collection, University of Mississippi)
- June 30, 1937
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image
pdf
(Government Records)
- November 22, 1937
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transcript
pdf
(AICPA Collection, University of Mississippi)
- December 27, 1937
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transcript
pdf
(Courtesy of the American Institute of Certified Public Accountants)
- December 27, 1937
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transcript
pdf
(AICPA Collection, University of Mississippi)
- June 30, 1938
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image
pdf
(Government Records)
- August 2, 1938
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transcript
pdf
(Courtesy of the Library of Congress)
- September 27, 1938
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transcript
pdf
(AICPA Collection, University of Mississippi)
- September 7, 1939
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transcript
pdf
(AICPA Collection, University of Mississippi)
- September 21, 1939
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transcript
pdf
(AICPA Collection, University of Mississippi)
- October 12, 1939
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transcript
pdf
(AICPA Collection, University of Mississippi)
- November 15, 1939
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transcript
pdf
(AICPA Collection, University of Mississippi)
- March 11, 1953
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transcript
pdf
(Government Records)
- October 16, 1954
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transcript
pdf
(AICPA Collection, University of Mississippi)
- March 10, 1956
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image
pdf
(Courtesy of Gary J. Previts)
- November 18, 1965
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transcript
pdf
(AICPA Collection, University of Mississippi)
Programs
- 18 October 2011
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Deloitte Fireside Chat VI: The SEC's Role in Accounting Standards Setting
Moderator: Mark Beasley
Presenter(s): Loretta Cangialosi, Robert Kueppers, Arthur Wyatt
- 21 April 2009
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Fireside Chat - SEC Office of Chief Accountant
Moderator: Theresa Gabaldon
Presenter(s): John Albert, Gary Previts
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