The electronic documents were then placed on the Division's file server. investors. Review ourcookie policyfor more information. All companies with existing or potential future SEC reporting requirements, Recent themes and trends in SEC comment letters, Areas of focus that may be on the horizon. By Farzad F. Damania, Jennifer L. Howard and Ryan A. Lilley. For more detail about the structure of the KPMG global organization please visithttps://home.kpmg/governance. Is based on SEC uploads (i.e., comment Audit Analytics - SEC UPLOAD comment letters issued related to Forms 10 -K and 10-Q for the 12 -month periods ended 30 June 2019 and 30 June 2020. Please refer to your advisors for specific advice. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. Technology continues to be a key theme for the regulators. This also gave management a better understanding of the audit results, since they also analyzed the resulting issue worksheets. The Commission receives thousands of filings each year by issuers registering securities and submitting required reports and schedules. Bloomberg. Includes only information related to reviews The SEC Division of Corporation Finance's filing review process is a key function utilized by the SEC staff to monitor the critical accounting and disclosure decisions applied by registrants. On the Radar briefly summarizes emerging issues and trends related to the accounting and financial reporting topics addressed in our Roadmaps. They felt that, in certain cases, Internet e-mail could possibly be a faster way to contact issuers. Misalignment between information sources will send up red flags and that means comment letters that can significantly set back the IPO timeline. They were: Communicate Staff Findings - Document and communicate staff findings from the review of disclosure filings to supervisors by preparing examination reports and draft comments. The twenty comment letters we reviewed appeared to be prepared in accordance with Division operating procedures. Please refer to your advisors for specific advice. We also expect the SEC staff The global business landscape has been changing rapidly, with the COVID-19 pandemic, Russias invasion of Ukraine, supply chain and labor issues, inflation, and rising interest rates affecting markets worldwide over the past year. Only three of the companies on the list raised issues concerning the Division's filing review process that resulted in a written response from the Division to the Chairman's office. This week, Heather Horn was joined by Valerie Wieman, a partner in PwC's National Office, to discuss a brand new comment letter tren Audit Methodology All rights reserved. "The military modernization in China in general, not just in the maritime area, is one of the fastest we've seen in human history, [and] it goes well beyond what China needs for its defense . Having 2023 be a year of focus on electricity, water, drainage and community needs will ensure a strong year of accomplishment that will have a direct impact on our citizens. Do your firms supervisors know the red flags that indicate a registered representative may be communicating through unapproved communication channels? We bring together extraordinary people, like you, to build a better working world. SEC comment letter industry insights and trends has been saved, SEC comment letter industry insights and trends has been removed, An Article Titled SEC comment letter industry insights and trends already exists in Saved items. addition, we expect the number of comments to grow next year because of a rise In September 2021, the Securities and Exchange Commission (SEC) provided a sample comment letter that included nine potential climate-related comments the SEC may issue to companies regarding their climate-related disclosure or the absence of such disclosure. The printed document may contain agency comments, charts, photographs, appendices, footnotes and page numbers which may not be reproduced in this electronic version. However, in certain industries, such as real estate, banking, and insurance, the checklist is augmented by specialized requirements for that industry called industry guides. that have been closed and subsequently posted to EDGAR. We find that deals for which S-4s receive an SEC comment letter have a significantly higher completion rate, although the M&A process is significantly prolonged. To minimize the duplication, management decided to consolidate the accounting and legal comments. To help the SEC meet its responsibilities under the Sarbanes-Oxley Act, the SECs Division of Corporation Finance (the Division) continues to selectively review documents filed by registrants under the Securities Act of 1933 and the Securities Exchange Act of 1934. Considerations, Including Industry expect these factors to affect the volume of comments next year as well. reviews were closed and posted to EDGAR after that edition PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. One of the most significant risks was missing a major issue during a filing review. It is for your own use only - do not redistribute. EY | Assurance | Consulting | Strategy and Transactions | Tax. She is a frequent speaker at industry conferences and a contributor to various online publications. A possible approach is to link staff performance evaluations more to the outcomes of filing reviews and impacts on the achievement of the Division's objective (improve disclosure to investors) and depend less on output measures. Are you still working? How does the health equity ecosystem move from awareness to action? If the firm permits employees to communicate with customers through these systems or other non-firm email addresses, the firm is required to supervise and retain those communications. On September 22, 2021, the Staff of the SEC published a sample comment letter regarding climate change disclosures. include registrant responses. You may withdraw your consent to cookies at any time once you have entered the website through a link in the privacy policy, which you can find at the bottom of each page on the website. These audit steps are described in further detail in Appendix A. However, even when removing these form letters from consideration, fully 2,341 individualized comment letters remaina substantial number, and a significant percentage (16%) of the . considering new requirements related to cybersecurity and climate disclosures, The field work was performed between May and October 1997 in accordance with generally accepted government auditing standards. Disclosure-event abnormal returns, revenue . We asked participants for their opinions on the pluses and minuses of working for the Commission, specifically the Division. Also, updates will be provided on-line. Specifically, the SEC asked companies how certain items (such as advertising or commission revenue, outcome-based . Management indicated that review of foreign filers was facilitated in an effort to encourage foreign issuers to register their securities with U.S. markets. Also, in August 1995, the Chairman organized the Task Force on Disclosure Simplification to review and streamline regulations relating to forms and disclosure requirements. May be different upon comparisons with the These outcomes of staff filing reviews were documented in "quantifiable benefits" memos. EY helps clients create long-term value for all stakeholders. Our review indicated that the Division issued comments within its 30 day timeframe on approximately 88% of the 1933 Act filings in our sample receiving full reviews and approximately 98% of the 1933 Act filings receiving a monitor for one or more specific items. Former San Antonio-area stock broker and investment adviser Matthew A. Supplemental information is requested when more information is needed to determine the appropriate disclosure for a transaction. To send a message to . On September 22, 2021, the Division of Corporation Finance (Division) of the Securities and Exchange Commission (SEC) issued a sample comment letter to highlight its increased focus on climate change-related disclosures or the absence of such disclosures in issuer filings under the Securities Act and the Exchange Act. We use cookies to personalize content and to provide you with an improved user experience. To stay logged in, change your functional cookie settings. the global economy has been affected by a variety of emerging market events, and They valued the experience of working in substantive areas of securities law. They thought the policy made it appear as if the foreign issuers were being "favored." Prior to the workshops, each participant received a handbook that described expectations and encouraged them to think about the management objectives in advance. The mean (median) number of comment letter rounds is 1.5 (1.0). Generally, this task is delegated to senior accountants and examiners. In addition, they described a "collegial" atmosphere. A brief statement that precedes the sample comment letter reiterates the view expressed in the SEC's 2010 interpretive guidance that a variety of existing SEC disclosure rules may . Company name must be at least two characters long. The Division should design and implement formal training for reviewers. Is related to reviews conducted by the SEC Comment Letter Do not delete! The applicable policy is dated August 19, 1997. Enabled by data and technology, our services and solutions provide trust through assurance and help clients transform, grow and operate. This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax, or other professional advice. Accordingly, the statistics presented may be affected by The workshop participants discussed and anonymously rated each supporting objective. For Reg BI, firms should be well on their way to determining technology changes needed for compliance with the new rule. For inquiries and feedback please contact ourAccountingLink mailbox. Although issuers do not always agree with the Division's proposed changes, they generally still make them. 4. Estimating variable consideration requires significant judgment, and the SEC asked about this judgment in 8.1 percent of its ASC 606 comment letters. All rights reserved. Smarsh is a registered trademark of Smarsh Inc. in the European Union. complied with the existing interpretive guidance. future area of focus for sec comment letters. Communicating through unapproved communication channels better working world they generally still make them filings each by... To the accounting and legal comments the Radar briefly summarizes emerging issues and trends related to reviews conducted by workshop. As if the foreign issuers were being `` favored. be well on their to... For Reg BI, firms should be well on their way to contact.... Year by issuers registering securities and submitting required reports and schedules to various online publications well on their to... San Antonio-area stock broker and investment adviser Matthew a and investment adviser Matthew a ASC comment! 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