Securities and Exchange Commission Historical Society

In the Midst of Revolution: The SEC, 1973-1981

What the SEC Expects

Towards Accounting Self-Regulation

- 1970 John "Sandy" Burton

The SEC relied on the FASB to develop accounting standards, but the agency took steps to supervise the setting of those standards by issuing a number of Accounting Series Releases "requiring registrants to include new types of disclosures in their financial statements."(55) In 1972, John "Sandy" Burton was hired as the SEC's Chief Accountant. Burton would prove to be an innovative thinker with an acute understanding of the principles and problems inherent in the accounting practice. During his term, the SEC would initiate a procedure to make earnings forecasts more reliable, set the principle of differentiated disclosure which recognized the varied skill set of individual investors, and encourage the practice of more detailed disclosure by firms of unanticipated and unusual risks to better advise investors.(56)

Events such as the corporate payments scandal, and the bankruptcy of the Penn Central and several other major corporations, caused the SEC and Congress to focus on accounting and auditing practices, and called into question the conduct of large accounting and auditing firms and the SEC's existing approach to the self-regulation of the profession. The U.S. Senate held hearings in 1976 on auditor performance, and published highly critical findings in The Accounting Establishment, known as the Metcalf Report, which contained a long list of suggested reforms.(57) In 1978, the U.S. House of Representatives proposed the establishment of a federal organization to regulate accounting practice before the SEC.

In response, the AICPA proposed regulations of certified public accounting firms for SEC and private practice, with peer-review of the CPA systems of quality control every three years. The proposal also established a public oversight board of five members to review and report on the SEC practice section's activities.

The SEC advocated that the AICPA be given time to regulate the professional practice of its members. At the same time, the SEC parlayed Congressional interest in additional regulation to encourage the AICPA toward expanded self-regulation.(58) While the accounting profession continued to take an activist role in its own regulation, changes to the accounting industry were to an extent driven by the SEC's recognition that principled accounting and corporate governance issues were an essential part of promoting and providing for adequate disclosure of facts to investors. This recognition re-built the infrastructure for the growing role the SEC would play in the regulation of securities-related accounting in the years ahead.

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Footnotes:

(55) Olson, 4

(56) Seligman, 527

(57) US Congress, Subcommittee on Reports, Accounting and Management, Committee on Government Operations (1976)

(58) Olson, 7-8


Related Museum Resources

Papers

November 14, 1973
image pdf (Courtesy of the estate of John R. Evans; made possible through a gift from Quinton F. Seamons)
December 20, 1973
image pdf (Courtesy of the Gerald R. Ford Library)
January 3, 1974
image pdf (Courtesy of the Gerald R. Ford Library)
January 8, 1974
image pdf (Courtesy of the estate of John R. Evans; made possible through a gift from Quinton F. Seamons)
January 17, 1974
document pdf (Government Records)
February 12, 1974
document pdf (Government Records)
February 28, 1974
document pdf (Government Records)
May 9 and 10, 1974
document pdf (Government Records)
May 30, 1974
transcript pdf (Courtesy of the estate of John R. Evans; made possible through a gift from Quinton F. Seamons)
May 30, 1974
document pdf (Government Records)
August 27, 1974
document pdf (Government Records)
September 11, 1974
transcript pdf (Courtesy of Harvey L. Pitt)
September 24, 1974
transcript pdf (Courtesy of the Gerald R. Ford Library)
October 25, 1974
document pdf (Government Records)
November 1, 1974
document pdf (Government Records)
January 6, 1975
transcript pdf (Courtesy of Harvey L. Pitt)
January 31, 1975
document pdf (Government Records)
February 18, 1975
document pdf (Government Records)
February 19, 1975
document pdf (Government Records)
April 26, 1975
document pdf (Government Records)
June 23, 1975
document pdf (Government Records)
August 21, 1975
transcript pdf (Courtesy of the Gerald R. Ford Library)
August 25, 1975
image pdf (Roderick Hills Papers, Courtesy of the Gerald R. Ford Library)
October 14, 1975
document pdf (Government Records)
October 28, 1975
image pdf (Courtesy of the estate of John R. Evans; made possible through a gift from Quinton F. Seamons)
October 29 and 30, 1975
document pdf (Government Records)
November 3, 1975
document pdf (Government Records)
November 11, 1975
document pdf (Government Records)
1976
image pdf (Arthur F. Burns Papers, Courtesy of the Gerald R. Ford Library)
1976
image pdf (Arthur F. Burns Papers, Courtesy of the Gerald R. Ford Library)
January 29, 1976
document pdf (Government Records)
March 16, 1976
document pdf (Government Records)
March 31, 1976
document pdf (Government Records)
April 16, 1976
transcript pdf (Arthur F. Burns Papers, Courtesy of the Gerald R. Ford Library)
May 1976
document pdf (Government Records)
August 27, 1976
image pdf (JT Ball Collection, University of Mississippi)
September 10, 1976
image pdf (Roderick Hills Papers, Courtesy of the Gerald R. Ford Library)
April 12, 1977
image pdf (Courtesy of the estate of John R. Evans; made possible through a gift from Quinton F. Seamons)
April 22, 1977
image pdf (Arthur F. Burns Papers, Courtesy of the Gerald R. Ford Library)
May 13, 1977
transcript pdf (Arthur F. Burns Papers, Courtesy of the Gerald R. Ford Library)
August 1, 1977
transcript pdf (Arthur F. Burns Papers, Courtesy of the Gerald R. Ford Library)
November 9, 1977
transcript pdf (Courtesy of the estate of John R. Evans; made possible through a gift from Quinton F. Seamons)
January 4, 1978
transcript pdf (Courtesy of the estate of John R. Evans; made possible through a gift from Quinton F. Seamons)
June 19, 1978
image pdf (Government Records)
July 1, 1978
image pdf (Courtesy of the estate of John R. Evans; made possible through a gift from Quinton F. Seamons)
August 22, 1978
image pdf (Government Records)
November 3, 1978
image pdf (Courtesy of the estate of John R. Evans; made possible through a gift from Quinton F. Seamons)
December 8, 1978
image pdf (Courtesy of the estate of John R. Evans; made possible through a gift from Quinton F. Seamons)
January 9, 1979
image pdf (Government Records)
February 28, 1979
image pdf (Courtesy of the estate of John R. Evans; made possible through a gift from Quinton F. Seamons)
June 18, 1979
transcript pdf (Courtesy of the estate of John R. Evans; made possible through a gift from Quinton F. Seamons)
September 18, 1979
image pdf (Government Records)
September 25, 1979
image pdf (Courtesy of the estate of John R. Evans; made possible through a gift from Quinton F. Seamons)
October 9, 1979
transcript pdf (Courtesy of the estate of John R. Evans)
October 12, 1979
image pdf (Courtesy of the estate of John R. Evans; made possible through a gift from Quinton F. Seamons)
November 19, 1979
image pdf (Courtesy of the estate of John R. Evans; made possible through a gift from Quinton F. Seamons)
November 19, 1979
image pdf (Courtesy of the estate of John R. Evans; made possible through a gift from Quinton F. Seamons)
January 3, 1980
image pdf (Government Records)
March 13, 1980
image pdf (Government Records)
May 14, 1980
image pdf (Courtesy of Stuart Kaswell)
May 28, 1980
transcript pdf (Courtesy of the estate of John R. Evans)
August 1980
image pdf (Courtesy of the Library of Congress)
September 1980
image pdf (Courtesy of the estate of John R. Evans; made possible through a gift from Quinton F. Seamons)
September 9, 1980
image pdf (All rights are owned exclusively by NYSE Euronext (copyright) 2009 NYSE Euronext. All Rights Reserved, courtesy New York Stock Exchange Archives)
September 16, 1980
image pdf (Government Records)
November 3, 1980
image pdf (Government Records)
November 24, 1980
image pdf (Government Records)
January 13, 1981
image pdf (Courtesy of the estate of John R. Evans; made possible through a gift from Quinton F. Seamons)

Photos

1970s

Oral Histories

26 March 1976

John C. Burton and Robert T. Sprouse

(Courtesy of the Academy of Accounting Historians, University of Mississippi)

04 May 2009

Nelson Kibler

07 July 2005

A. Clarence Sampson

Programs

18 September 2007

Fireside Chat - Accounting Aspects of the Foreign Corrupt Practices Act

Moderator: Theresa Gabaldon

Presenter(s): Philip Ameen, Teresa Iannaconi

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