FEI addresses financial reporting complexity

The Financial Executives International (FEI) notes that the complexity and technical demands of accounting and disclosure standards have increased considerably in recent years. It believes complexity harms the ability of users of financial statements to understand the information provided and impairs the ability of preparers to explain their financial results in a meaningful way. Investors are not well served by the drain on shareholder wealth from the excessively complex compliance process. The capital markets are not well served when scarce financial resources are not used in value-enhancing business initiatives but to satisfy disclosure and accounting requirements that fail to meet cost-benefit tests. The FEI’s Four Point Plan recommends steps to address complexity, including a call for all stakeholders in the financial reporting process to come together to form an independent “Committee on Complexity.”