Chief Accountant Kurt Hohl: Building Trust in Our Capital Markets

**Kurt Hohl** (0:00)
Investors want information, but there's a difference between investor wants and investor needs. The question is, what's really material? And that underpins our financial reporting model that we follow here at the Commission.

**Paul Atkins** (0:13)
Artificial intelligence. It's taken the world by storm.

**Kurt Hohl** (0:16)
This commission encourages innovation and how innovation can change and better our marketplace. No matter what companies do, management's ultimately responsible for the financial statements, and they need to understand the risks associated with that. Alexander Hamilton, he built a financial system on trust.
And that continues to be the mission of the SEC today.

**Paul Atkins** (0:42)
Hello, and welcome to another episode of Material Matters. Today, I'm delighted to sit down with Kurt Hohl, the SEC's Chief Accountant. Now, this is not Kurt's first tour at the SEC. He was the Associate Chief Accountant in the Division of Corporation Finance. In the late 1980s and 1990s, serving under three different Chairman and Chief Accountants during that time.
Now, as our Principal Advisor to the Commission on Accounting, Auditing, and Controls-related Standards for Public Financial Reporting purposes, Kurt plays an invaluable role in fulfilling our mission of protecting investors, ensuring fair and orderly markets, and facilitating capital formation.
Today, we'll explore many ways in which the work of his office impacts companies and investors around the globe. So, let's get started. Kurt, thank you very much for joining me today here on Material Matters. Now, as I mentioned a bit there, accounting and auditing underpin investor confidence in the integrity of companies, disclosures, and our capital markets at large is one of the essential things that the SEC has done really since its inception back in 1934 And so, your office is really critical in maintaining trust in our markets and in upholding our agency's mission of investor protection. So, maybe you could tell us a little bit about the role of the chief accountant within the SEC and how you interact with the commission.

**Kurt Hohl** (2:19)
Great. Thanks for having me here. Look, I think back on the formation of the American capital markets all the way back in the late 1700s under Alexander Hamilton, he built a financial system that was built on trust, that people could have faith in the capital markets. We would honor our obligations. And that continues to be the mission of the SEC today. And the office of the chief accountant, or we like to refer to as OCA, plays a role, important role in that because as you know, financial statements and the auditing of financial statements plays an integral role in our financial system today.
So the office of the chief accountant, one of the oldest offices in the commission, I was told it's the oldest continuously named office in the commission dating back to 1935
And we play, like you said, an important role in protecting investors, making sure that there's trust in the financial markets through the preparation of financial statements, the controls over the financial statements, and the audits of those financial statements. So we serve as, like you indicated, the principal advisor to the commission. We work with all the divisions on issues related to accounting and auditing, whether it be rulemaking or interpretive guidance. The office of the chief accountant serves a vital role for issuers in terms of providing guidance in what can sometimes be very complex accounting standards as they relate to public companies. So we take pride in the fact that we work with issuers and registrants before they file with the SEC to make sure they get it right, because getting it right helps investor confidence in the marketplace. We don't want companies to file with the SEC and then us taking a look at filings and say, nope, we disagree with you, and you have restatements. We also play a very important role with standard setters, whether they be the Financial Accounting Standards Board or FASB, we oversee their standard setting agenda, making sure that their standards are relevant for investors and timely in terms of providing guidance on developing issues. We also work very closely with the Public Company Accounting Oversight Board, or PCOB, in terms of their oversight of the auditing profession. That's something that was new, wasn't there when I was here the first time. It's been around for 20 some years, but it serves an important role and function for the financial markets and the underpinning of the financial markets. Then we also interact fairly significantly with international standard-setters and international regulators due to the pervasiveness of foreign companies entering our markets.
We have a lot of touch points. I'd like to say we're a small office in size, but we're fairly large in stature.