Although investors are less confident in U.S. capital markets than they were a year ago, 70% or more continue to voice confidence in the markets and U.S. companies in general, as well as in audited financial statements, according to the Center for Audit Quality’s second annual survey of investors.

Seventy percent of investors who were surveyed between July 10 and July 20 expressed confidence in U.S. capital markets, down from 84% in July 2007. Rising gas and oil prices, the weakness of the dollar and the home foreclosure crisis were the top reasons for their reduced faith. Public confidence in audited financial statements was 73%—down from 80% a year ago.

A larger number of investors now describe themselves as “inexperienced” investors, with a corresponding increase in reliance on a broker or money manager. Eleven percent of investors say they have diversified their portfolios. The survey also found that nearly half of investors (45%) read companies’ financial reports “very” or “somewhat” often, but that many find the reports hard to use. Respondents voiced strong support (72%) for the design of a more user-friendly way of accessing and reading financial reports.

The relevance of financial reporting was the dominant theme of the CAQ’s recently concluded Public Dialogue Tour, according to CAQ Executive Director Cindy Fornelli. “In 10 cities across the country, the public company auditing profession heard from a variety of stakeholders that modernizing the business reporting model—and doing so in a manner that puts investors’ needs first—should be our highest priority,” Fornelli said in a press release. “That will be the primary focus of the Tour’s final report to be issued later this year.”

In addition to the design of more user–friendly financial reports, other proposals that investors said would give them a higher level of confidence are:

Creating an institute for auditing firms to share experiences and develop best practices for fraud prevention and detection (67%).

Allowing investors to access financial reports in a way that is customized to their specific interests and expertise (63%).

Requiring enhanced levels of public disclosure that provide investors with more information when public companies change auditors (63%).

Creating a single, uniform, international set of accounting standards (62%).

The survey summary and the complete questionnaire are posted on the CAQ’s Web site,

Secretary of Labor Elaine L. Chao and SEC Chairman Christopher Cox signed a memorandum of understanding (MOU) that formalizes cooperation to share information relating to retirement and investments, and provide investors, benefit plan participants, and plan administrators with better access to more understandable information for making informed investment decisions.

The MOU establishes a process for the Labor Department’s Employee Benefits Security Administration and SEC staff members to share information and meet regularly to discuss matters of mutual interest, including examination findings and trends, enforcement cases, and regulatory requirements that impact the missions of both agencies.

For a copy of the MOU, visit or


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