In letters to the Norwalk, Conn.-based Financial Accounting Standards Board and the London-based International Accounting Standards Board, Reed called for both organizations to step up efforts to improve reporting of off-the-books deals, which can conceal debt loads from investors.

"After the decline in investor confidence brought on by first Enron and then other corporate scandals, and now the subprime-related issues, further disruption of the markets caused by a lack of transparency and failure to address some of these issues is unacceptable," Reed wrote.

While Reed acknowledged that accounting standard setters have tried to remedy shortcomings in disclosure of off-balance-sheet transactions, he said their efforts to date seem "to have fallen short of what investors need."

Reed, who chairs the Senate Banking Committee's subcommittee on securities, said investors need more information on structured investment vehicles, or SIVs, and special purpose entities, or SPEs, including the extent of losses faced by the companies that formed these off-the-books investment vehicles.

Timely information on assets, liabilities and cash flows of SIVs and SPEs, and any effect on the liquidity, cash flow and income of the sponsoring company would be helpful as well, according to Reed. In addition, he suggested investors and markets be informed of any changes in value of securities held in such vehicles, and any "predictive information" available to management that would give advance warnings of potential or pending losses.

Reed also questioned how two FASB standards on fair valuation are being applied, asking whether the valuation rules may be providing more information but at the expense of reducing consistency, comparability and reliability of financial information.