The Securities and Exchange Commission (SEC) has written to all US utility holding companies to warn them of "extremely serious" consequences if they do not make their IT systems Year 2000 compliant.
In a letter sent last week, SEC chairman Arthur Levitt stressed the importance of implementing a Year 2000 compliance strategy as a matter of urgency. He emphasised the need for companies to allocate sufficient resources to tackling the crisis. He urged SEC registered companies to "make every effort...to keep the SEC and other regulators apprised of all issues pertinent to Year 2000 preparation that may affect investors and consumers."
Levitt wrote: "I also want to re-emphasise the importance of providing investors with meaningful disclosure concerning any material effects that Year 2000 problems may have on the company. There are a myriad of considerations that accompany Year 2000 readiness; many that the Commission cannot appropriately address without adequate information and feedback from utility holding companies."
The SEC warning was welcomed by the American Institute of Certified Public Accountants (AICPA), which said it approved of plans to provide additional guidance to registrants so that the potential impact of the Year 2000 on a company's operations is more fully disclosed in 1997 report filings with the SEC.
AICPA chairman Stuart Kessler and Robert Herz, chair of the AICPA SEC Regulations Committee, sent a letter to Levitt, registering their concern that many companies have either not yet recognised the technological challenges of fixing the Year 2000 problem, or are still determining its potential cost and impact on operations.
The Association said it believes information about Year 2000 planning should be made available to investors. SEC regulations on public disclosure of information in public filings do not specifically require Year 2000 related disclosures.
The letter warned: "Our Committee is concerned that, absent further interpretive guidance from the Commission, the investing public is not likely to receive important, timely and specific information about the assessments, if any, made by most registrants as to the extent of such registrant's Year 2000 issue."
The SEC appeared to accept this plea at AICPA's National Conference on Current SEC Developments when Brian Lane, director of the SEC's Division of Corporate Finance, indicated that the SEC staff will be reviewing guidelines for Year 2000 company disclosures. Lane expects the additional guidance to be available later this month.
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