The abstract is available below. If you want to read the full resource, please submit a request and we will email you the document. You can also sign up to receive email alerts when we post new articles and papers.

Abstract

There is great variance in the quality of environmental reporting for publicly-traded corporations mainly due to the interpretive nature of the Security & Exchange Commission (SEC), American Institute of Certified Professional Accountants (AICPA), and Financial and Accounting Standards Board (FASB) guidance. Even today, after the passage of the Sarbanes-Oxley Act (SOX), dealing with accuracy in financial reporting related to environmental accruals is highly variable in method and detail. For privately held corporations the standards are even murkier as SOX is not applicable. However, even privately held corporations are held to industry accounting standards (e.g. FASB). This is especially the case when dealing with transactions where valuations utilize methods and rules generated under these organizations.

Although enforcement of SOX is a focus of the SEC at this time, some practicality as it relates to smaller firms has crept into the process. From enactment of SOX through 2004, the focus of the SEC was on revenue recognition. Since 2005, a hot button for the SEC includes improved reporting of liabilities, including environmental liabilities. Recent SEC enforcement related to Safety-Kleen, Conagra and Ashland Inc. serve to illustrate this enforcement.

BLDI’s annual survey of audit professionals indicates a continued dramatic variance in reporting of environmental liabilities and asset retirement obligations from small to large firms. However, in the 2006 survey, the variance between mid-size audit firms to the Big Four narrowed.

Back to Resource Archive