The Securities and Exchange Commission ("SEC") plans to have an inaugural roundtable in the Financial Reporting Series.

The purpose of the Financial Reporting Series is to proactively help identify risks and potential improvements in the financial information provided to investors. The inaugural roundtable will examine the extent to which financial reporting should include measurement uncertainties, and the information investors find important to understanding and assessing those uncertainties.

The SEC wants to consider whether the right balance has been struck to provide investors with useful information. The roundtable discussion will provide an opportunity to hear directly from investors about challenges in understanding the types of uncertainties included in financial reports.

This roundtable will feature three panels comprised of investors, financial statement preparers, and auditors that will provide input about those measurements (and associated disclosures) where the outcome depends on future events that by definition are presently unknown. As the initial step in gathering input on this topic, the roundtable discussion will focus on:

• Measurement and recognition - whether measurements that involve uncertainties provide investors with useful information
• Disclosure - the information that investors find important to understand and assess measurement uncertainties and the challenges or impediments that preparers face in providing that information.
• Auditability - the auditors' role and responsibility for reporting on financial statements with measurement uncertainties.

Certain recent accounting standards have increased the extent of measurement uncertainties in financial statements and some standards have attempted to increase the transparency into measurement uncertainty that underlies financial statements items. Nonetheless, there continues to be questions about the recognition and measurement of uncertainty; the disclosures necessary to understand the measurement uncertainty; and how uncertainty impacts auditability.

Examples of some of the various accounting treatments that currently incorporate uncertainty include:

• Certain guarantees that are measured based on probability-weighted expected future outcomes.
• Certain illiquid financial assets that are measured at present value based on discounted future cash flows, regardless of the uncertainty of those cash flows.
• Statements that include substantial doubts about an entity's ability to continue as a going concern, and where the financial statements are generally not adjusted to reflect the uncertainty. Instead, disclosures are provided and include, among other things, information about the uncertainty, the recoverability and classification of recorded asset amounts, and the amounts or classification of liabilities.