I was glad to read an article by Kathleen Hoffelder recently about a growing trend in financial reporting. Plain English is finally taking its place as an approved language for use in financial statements. If you're going to say something, make it easy to understand. Even though you may know what you're talking about, if your audience doesn't, you're not helping anybody. I've made it my business to make accounting and finance easier to understand for years. That's why I called my company Clear Financial Solutions. I'm glad that the American Institute of CPAs is actively saying this now.
In Miss Hoffelder's article, Brian Lane, former SEC director of the division of corporate finance, is reported to talk about the Management's Discussion and Analysis section as being the worst offender. It's suggested that executives want to assure everyone that they know what they're talking about by making it difficult to know what they're talking about. In addition, lawyers like to use language that often makes it even more difficult to understand the MDA section. I think it’s important that users be able to understand what companies are doing and what their plans are for the future. I fully endorse the efforts of the SEC to encourage the use of plain English in public filings.
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