Promoting Transparency in Financial Reporting Act of 2006

PROMOTING TRANSPARENCY IN FINANCIAL REPORTING ACT OF 2006

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Mr. ISRAEL. Madam Speaker, I yield myself such time as I may consume.

Madam Speaker, I rise today in support of the Promoting Transparency in Financial Reporting Act, and I want to thank my very good friend from Kentucky (Mr. Davis) for introducing this important measure. I was pleased to cosponsor it and I am very pleased to work with him on the bill.

I also want to thank the chairman and ranking member of the Financial Services Committee, Mr. Oxley and Mr. Frank, for bringing this bipartisan legislation to the floor today.

H.R. 5024 requires that the chairpersons of the Securities and Exchange Commission, the Financial Accounting Standards Board, and the Public Company Accounting Oversight Board provide oral testimony to the Committee on Financial Services on their efforts to reduce the complexity in financial reporting to provide more accurate and clear financial information to investors. These appearances before the committee would begin in 2007 and continue annually for 5 years.

Madam Speaker, the ability of America's investors to make informed decisions is severely compromised when financial reporting is inaccurate, when it is incomplete, when it is unclear. We saw the consequences of bad financial reporting years ago during the corporate accountability scandals at Enron and WorldCom, among others. Those bankruptcies not only revealed weaknesses in many aspects of our financial reporting system, but showed the devastating financial impact when their financial statements are not held to the highest standards.

In many cases, the complexity of financial reporting requirements has made it very difficult to detect purposeful violations of those standards. Congress, regulators, and the industry assessed these financial reporting failures and reacted with efforts aimed at strengthening the financial reporting system. Sarbanes-Oxley made very important initial strides to this end; however, more needs to be done.

This measure is an important next step. By calling on the SEC, PCAOB, and FASB to testify each year on the steps they are taking to improve financial disclosures, Congress is ensuring that it can and will effectively carry out its oversight function. We can gather the necessary information to ensure that, should we need to act legislatively, we are doing it in a sober, thoughtful manner based on data rather than in haste as we respond to the latest news cycle.

Madam Speaker, this legislation will help us as we work with the FEC, FASB and the PCAOB to improve our financial reporting system. It is important that we maintain a consistent focus on this issue. And, to that end, I urge all of my colleagues to support the measure. Again, I was pleased to work closely with the gentleman from Kentucky.

Madam Speaker, I reserve the balance of my time.

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