A practical playbook has yet to be developed by audit committees (acom) for performing as the SOX enabled mediator between management and the auditors. In my experience advising the acom in its relatively new role, I’ve observed more differences than similarities in approaches to mediating different pov’s between management and the auditors, on issue specific financial reporting.

The role is a powerful tool for assuring accurate and transparent reporting is accomplished on behalf of the shareholder. But the dance steps require the acom to act with strident independence of the parties it routinely relies on (management and the auditors), to navigate to the right answer.

A good place to start is with an understanding that there can be more than one right answer. It disarms bias and allows the acom to address competing solutions for a single fact set. The SEC understands there can be more than one right answer and has made that clear in public speeches of its senior staff (the ’06 AICPA Conference on SEC reporting issues in DC comes to mind). It’s not something the institution is holding seminars on but to its credit, its staff will discuss the topic in public.

As a federal policy maker and interpreter, a great authority accrues to the SEC. When it has doubts about an issue, its mere objection is enough to shut down capital formation or M&A. So when it recognizes there can be more than one path to a reporting solution, it comes from relentless experience with that very outcome.

As a staff member you are routinely resolving a half dozen unique or complex fact sets being argued by highly competent and motivated teams of audit & law partners and their staff, working on behalf of management or the shareholder. The outcome bears directly on the capital and liquidity of the enterprise and has time constraints that come down to days and at times, hours.

Out of that comes a carpenter’s knowledge of how rules are made, interpreted and applied off the page, in functioning markets, by an enterprise with the well-being of investors relying on them for accuracy. The acom’s mediation role puts them on that same stage. It’s good sense to stand on the SEC’s shoulders for mediation issues and recognize there can be more than one right answer and know when it’s happening to you.