Use our Accounting Research Online website for financial reporting resources. This message will not be visible when page is activated. Staff document and communicate findings from the review of disclosure filings to supervisors by means of an examination report and draft comments. The sample comment letter includes an illustrative, non-exhaustive list of comments that the SEC's Division of Corporation Finance may issue to companies about their climate-related disclosure or the absence of such disclosure. We summarized the comments on flip charts. It is for your own use only - do not redistribute. Participants were asked to describe risks in the examination report/draft comment process. After reviewing this information, the Office contacted an additional five companies, not on the Division's list, for their feedback on the Division's comment letter process. The Division communicates its comments to the issuer after the filing review to obtain appropriate improvements in disclosure. The CSA methodology used in the audit consists of four primary tasks: identify management objectives, convene workshops to discuss and rate each objective, evaluate the workshop data, and prepare an audit report. She earned her Juris Doctorate from Nova Southeastern University. Participants generally agreed that the Division does a good job in communicating the results of their reviews to issuers. Exceptional organizations are led by a purpose. Sometimes the review staff changes or the workload becomes such that no time is available for follow up on futures comments. We also expect the SEC staff to continue monitoring the effects of the COVID-19 pandemic, the Russia-Ukraine war, supply chain disruptions, labor shortages, inflation, and rising interest rates, as well as other emerging market events, and perhaps focus future comments on accounting and reporting related to these matters. reviews that are still ongoing or have recently been include registrant responses. Some participants indicated that the 30 day timeframe to the first round of comments for domestic issuers and the two week timeframe which is sometimes given to foreign issuers did not appear equitable. Our SEC Reporting Update publication focuses on key trends in SEC staff comment letters issued for the year ended 30 June 2019, including an increase in comments related to the new revenue standard and a focus on the use of non-GAAP measures that employ individually tailored accounting principles. in the 2022 edition of this publication: Was derived from data provided by Audit Public comment letters relating to SEC rulemaking and regulatory actions are found in . April 16, 2021 . Participants felt that outstanding staff not only reviewed a lot of filings, but also saw the larger issues in a filing, the impact of their comments on those issues, and knew how to proceed appropriately. For Reg BI, firms should be well on their way to determining technology changes needed for compliance with the new rule. addition, we expect the number of comments to grow next year because of a rise years to come. 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. Specific enhancements such as improving the Division's EDGAR document upload capability are planned to be done as separate work orders, or "Technical Instructions," after the contract is awarded. For instance, reviewers sometimes appeared inconsistent in their approaches. Transactional filing reviews, such as those related to mergers and acquisitions (M&A), are a priority of the SEC to which it dedicates significant resources. of Professional Practice, KPMG US. Management Objectives billion or more of revenue, although these larger registrants represented only Also, some reviewers are seen as not willing to discuss their review results with the staff. Firms receiving comment letters from the SEC are more likely to restate financial statements (Adams et al., 2017;Cassell et al., 2013;Heese et al., 2017; Ryans, 2020). There may be several rounds of letters from the SEC staff and responses from the filer until the issues identified in the review are resolved. Resolve Comments ENDNOTES. Such comment letters are along the lines of an illustrative comment letter released by the Securities and Exchange Commission's (SEC) Division of Corporation Finance (Division) in September 2021 . The issuers we contacted indicated that their experiences with the Division were generally positive. Management reviews the examination report and draft comments for policy considerations such as materiality and uniformity with prior comments on similar issues. The Division should communicate to the staff management's contention that it uses the number of filings reviewed as only one staff performance measure. Explore Deloitte University like never before through a cinematic movie trailer and films of popular locations throughout Deloitte University. We also expect the SEC staff to continue monitoring the effects of the COVID-19 pandemic, the Russia-Ukraine war, supply-chain disruptions, labor shortages, inflation, and rising interest rates, as well as other emerging market events, and perhaps focus future comments on accounting and reporting related to these matters. was issued. The Division provided us with an overall list including 192 companies for which information was provided to the Chairman's office between March 1997 and July 1997. The SEC began publicly releasing this correspondence in 2005 for filings made after August 1, 2004 that were reviewed by the SEC staff. Each general category contains an average of five sub-elements. CEO survey: US CEOs brace for a recession of unknown magnitude. Questionnaires are presented after each segment and at the end of the course to obtain feedback from the participants in an effort to continuously improve the program. 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. The primary objective developed by management was: Management also developed six supporting objectives, reflecting the activities that make achievement of the primary objective more likely. letters that the SEC issued to registrants) and does not Initially, the issuer communicates with the staff accountant and examiner. priorities: For a comprehensive discussion of Very limited successful actions for implementation exist and obstacles are so prevalent that the unit is significantly impaired from implementing the supporting objective. (Bloomberg) Microsoft, which is eliminating 10,000 jobs and trimming some of its hardware lineup, will reduce its HoloLens goggles business as it scales back work on a . This supplemental material is sometimes proprietary information that should be protected from public disclosure. Participants felt that the EDGAR (Electronic Data Gathering, Analysis, and Retrieval) system should be improved to make it more useful in filing reviews. Comment Letters. Participants indicated that some reviewers read the entire filing before reviewing the examination report, others scanned the filing, while still others relied solely on the examination report. This webcast will feature: Recent themes and trends in SEC comment letters The questions gave structure to the discussions and facilitated the conduct of the workshops. 2023 KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. Lack of flexibility in work hours concerned some staff. While the SEC is Receive timely updates on accounting and financial reporting topics from KPMG. These responses were generally consistent with responses from other issuer contacts the Division discussed with us. FASB Accounting Standards Codification Manual, SEC Rules & Regulations (Title 17 Commodity and Securities Exchanges), Trust Services Principles, Criteria, and Illustrations, Principles and Criteria for XBRL-Formatted Information, Audit and Accounting Guides & Audit Risk Alerts, Other Publications, Press Releases, and Reports, Dbriefs Financial Reporting Presentations, Business Acquisitions SEC Reporting Considerations, Comparing IFRS Accounting Standards and U.S. GAAP, Consolidation Identifying a Controlling Financial Interest, Contingencies, Loss Recoveries, and Guarantees, Convertible Debt (Before Adoption of ASU 2020-06), Environmental Obligations and Asset Retirement Obligations, Equity Method Investments and Joint Ventures, Equity Method Investees SEC Reporting Considerations, Fair Value Measurements and Disclosures (Including the Fair Value Option), Guarantees and Collateralizations SEC Reporting Considerations, Impairments and Disposals of Long-Lived Assets and Discontinued Operations, Qualitative Goodwill Impairment Assessment A Roadmap to Applying the Guidance in ASU 2011-08, SEC Comment Letter Considerations, Including Industry Insights, Transfers and Servicing of Financial Assets, Roadmaps Currently Available Only as a PDF. SEC Reporting, CFGI analyzed over 100 SEC comment letters made available by the SEC between April 1, 2013 and September 30, 2013. Do your firm and your associated persons apply a best interest standard to recommendations of types of accounts? 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. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. From time to time, the SEC invites comments from the public on Proposed Rules, Concept Releases, Self-Regulatory Organization filings, Public Company Accounting Oversight Board Rulemaking, Rulemaking Petitions, and Other Releases. Participants in several workshops indicated that the Division could be even more successful in resolving comments with more follow-up of futures comments on Forms 10K. The results of the review are to be discussed with the staff accountant and examiner, who make the appropriate changes before the comment letter is issued. By continuing to browse this site, you consent to the use of cookies. The letters are limited to the specific facts of the filing in question and do not apply to other filings. FINRA will review how firms review, approve, supervise, and distribute retail communications regarding private placement securities via online distribution platforms9, as well as traditional channels. That their experiences with the Division should communicate to the issuer after the filing review to obtain appropriate improvements disclosure... No time is available for follow up on futures comments a recession unknown. 2004 that were reviewed by the SEC staff experiences with the new rule the new rule filings after. You consent to the use of cookies improvements in disclosure comment process with the new rule unknown.! 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