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• CalPERS Initiative to Ensure the Integrity of Financial Reporting

CalPERS Initiative to Ensure the Integrity of Financial Reporting

As an investor and provider of long-term capital, CalPERS has a great interest in the improvement and integrity of financial reporting. Investors and shareowners should expect auditors to bring integrity, independence, objectivity, and professional competence to the financial reporting process. Public and investor confidence and stability are essential to the success and effective functioning of the capital markets. To ensure this confidence, as an active investor, CalPERS will provide leadership through substantive initiatives which include:

• Expand CalPERS Global Principles of Accountable Corporate Governance as it relates to accurate financial disclosure, international financial reporting standards and auditor independence;
• Improve financial disclosure and audit practices through direct company engagement in the CalPERS Focus List Program;
• Comment to regulators to assist with market reform, auditor independence and accurate financial reporting;
• Engage audit committee directors through the National Association of Corporate Directors;
• Participate in advisory boards and roundtables to provide investors, perspective — International Corporate Governance Network, Public Company Accounting Oversight Board, Financial Accounting Standards Board, Securities and Exchange Commission and Congressional Committees;
• Participate within the market to address current issues:
  

  2009   2008

2009

1. May 29, 2009, Concept Release on Possible Revisions to the PCAOB's Standard on Audit Confirmations.
2. April 22, 2009, Request for views on Proposed FASB Amendments on Fair Value Measurement and to Impairment Requirements for Certain Investments in Debt and Equity Securities.
3. April 20, 2009, Comment letter to the SEC regarding the Roadmap for the Potential Use of Financial Statements Prepared in Accordance with Intenational Financial Reporting Standards (IFRS) by U.S. Issuers.
4. April 14, 2009, Comment letter to the FASB and IASB regarding preliminary views on financial statement presentation.
5. February 18, 2009, Proposed Auditing Standards Related to the Auditor’s Assessment and Response to Risk and Conforming Amendments to PCAOB Standards.

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2008

1. October 8, 2008, Signatory support to petition the American Stock Exchange (AMEX), NASDAQ OMX Group, Inc. (NASDAQ), and the New York Stock Exchange (NYSE) to require all companies listed on these exchanges to submit their choice of auditor to a non-binding vote of shareowners for ratification (PDF, 525 KB). Proposed Listing Requirement as recommended by the Advisory Committee on the Auditing Profession (ACAP) to the U.S. Department of the Treasury.
2. September 20, 2008, Comment letter to the International Accounting Standards Committee Foundation (IASC Foundation) regarding governance and public accountability (PDF, 2.4 MB) (the creation of a Monitoring Group) and the independence and composition of the International Accounting Standards Board (IASB).
3. August 8, 2008, Comment letter to the Financial Accounting Standards Board regarding disclosure of certain loss contingencies (PDF, 28 KB) – Statement of Financial Accounting Standards No. 5 and 141R.
4. July 24, 2008, Comment letter to the SEC on proposed rule regarding Interactive Data to Improve Financial Reporting (PDF, 24 KB).
5. Follow-up letter on June 13, 2008 in response to US Treasury Department Advisory Committee on the Auditing Profession (ACAP) (PDF, 24 KB) requesting that auditors accept responsibility for detecting fraud and improving the timely communication of these frauds to investors and shareowners; that auditors document their judgments about accounting principles and critical accounting policies in the audit report; mandate the engagement partner's signature on the audit report; provide additional transparency by providing the firm's issuer-related practice, special events at the audit firm as well as public disclosure of accounting firms' audited financial statements.
6. March 13, 2008 to the Securities and Exchange Commission - Advisory Committee on Improvements to Financial Reporting (CIFiR) (PDF, 45 KB) Panel regarding Materiality, Restatements and Professional Judgment.
7. February 4, 2008 to the US Treasury Department - Advisory Committee on the Auditing Profession (ACAP) (PDF, 41 KB) - Panel on General Sustainability of the Auditing Profession in which CalPERS shared its views on Auditor Independence -Auditor Liability and Risk, Audit Firm Structure & Ownership, Transparency and Governance, Auditor Responsibility for Fraud Detection, Communication with Investors and Choice in the Audit Market - Competition and Use of Other tier Auditors.

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