On Wednesday the Securities and Exchange Commission, building on recent efforts to improve disclosure of executive pay, said a new committee will examine all aspects of corporate financial reporting with an eye to making it more understandable.

The SEC Advisory Committee on Improvements to Financial Reporting will study the causes of complexity and recommend to the Commission how to make financial reports clearer and more beneficial to investors, reduce costs and unnecessary burdens for preparers, and better utilize advances in technology to enhance all aspects of financial reporting.

"Our current system of financial reporting has become unnecessarily complex for investors, companies, and the markets generally," Chairman Cox said. "The time is ripe to review how that system can be made less complex and more useful to investors."

Robert C. Pozen, chairman of MFS Investment Management in Boston and former vice chairman of Fidelity Investments, will chair the SEC's advisory committee. Chairman Cox said he expects between 13 and 17 additional members with varied backgrounds to be named to the advisory committee within the next few weeks.

"In addressing the complexity of the current system, our advisory committee will focus not only on offering better guidance to preparers of financial reports, but also on providing more user-friendly disclosures to meet the different needs of various types of investors," Mr. Pozen said.

Baltimore accounting god Jack Ciesielski hopes the agency will look at the U.S. legal system, which encourages shareholder lawsuits against corporations. The tort landscape compels corporate lawyers and accountants seek explicit, detailed instructions from bookkeeping authorities on what to report -- to bolster their defenses if they get sued, Ciesielski says. That, he says, adds to complexity.

What the committee is examining, he says, is

All stuff that’s been discussed in the accounting and finance world, and if major actions are taken on any of them, it could change life as we know it for investors, preparers and auditors. Anybody in those three categories should pay close attention to the workings of this committee.