To send a message to . Our internal subject matter experts and our network of external industry experts are featured with insights into the technology and industry trends that affect your electronic communications compliance initiatives. Division staff are now able to access the applicable guidance on-line. She earned her Juris Doctorate from Nova Southeastern University. Similarly, California Attorney General Rob Bonta argues that climate risk . are on the horizon, we look to the Commissions priorities to help us predict Staff Performance Measures, Appendix A - Control Self Assessment Methodology All rights reserved. EY | Assurance | Consulting | Strategy and Transactions | Tax. The filings are received by the Commission, sent to the Division, and then screened for review. Participants emphasized that these checklists and guides, while useful, are not a substitute for the ability to understand the transaction in the filing. The second type of comment letters, between SEC staff and SEC filers, are contained in the SECs EDGAR database (see How to Search for EDGAR Correspondence). Read our best practices here. Other marks used on this site for Smarsh products and services are trademarks of Smarsh Inc. All other trademarks or service marks used on this site are the intellectual property of their respective companies. In issuing comments to a company, the staff may request that a company provide additional supplemental information so the staff can better understand the companys disclosure, revise disclosure in a document on file with the SEC, provide additional disclosure in a document on file with the SEC, or provide additional or different disclosure in a future filing with the SEC. Asking the better questions that unlock new answers to the working world's most complex issues. Management and staff also agreed that the Division is composed of, for the most part, hardworking, conscientious, highly qualified and motivated staff who are dedicated to improving disclosure to investors. Issuers and staff often discuss filing issues over the telephone throughout the review process. 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. Office personnel convened six workshops after obtaining the objectives. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. letters that the SEC issued to registrants) and does not Dawn Taylor welcomes Dr. Pamela Larde . Copyright 2023 Deloitte Development LLC. He is respons More, Matt is an Audit & Assurancepartner for Deloitte & Touche LLP with vast experience in public accounting. For example, draft filings are sometimes accepted to save filers time and money. More segment reporting comments in 2020. Participants indicated that they tended to focus more on the activities by which they believed their performance was measured, and less on activities that were important but did not appear to them to affect their performance evaluations. These comments are largely focused on information related to climate change-related risks and opportunities which may be required in disclosures of a companys description of business, legal proceedings, risk factors, and managements discussion and analysis of financial condition and results of operations (refer to the Commissions. We designed the workshops to be homogeneous with respect to management or professional staff to facilitate subsequent comparisons. Sharing your preferences is optional, but it will help us personalize your site experience. See Terms of Use for more information. Fullwidth SCC. Workshop participants agreed that the current process works well in resolving comments. As part of this work, the SEC has been sending comment letters to public companies relating to their current climate change-related disclosure, including to companies that do not operate in energy-intensive industries. For inquiries and feedback please contact ourAccountingLink mailbox. The following areas are central to the standard's accounting and disclosure requirements and are often the subject of SEC comment letters: 1. Division of Forms 10-K, 10-K/A, 10-Q, and 10-Q/A (which are 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 . Does your firm have procedures and training in place to assess recommendations using a best interest standard? attributable to increased transaction activity related to traditional initial Explore the topics at the Financial Reporting View. "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 . DTTL and each of its member firms are legally separate and independent entities. 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. This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors. Communicate Comments 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. 9:32 - How the focus of the current SEC administration impacts the type and volume of comment letters; 12:03 - The top non-GAAP comment letter trends and the importance of continuously reassessing these measures; 20:58-The interaction of current macroeconomic events and non-GAAP measures 27:34-What companies should focus on when looking ahead . After discussing an objective, participants used 4x6 inch cards to anonymously rate, using a scale of 1 to 7, how well the Division achieved the objective. 2023 Smarsh Inc. Smarsh and the Smarsh logo are registered trademarks of Smarsh Inc. in the United States. As a result of their review, they edit and add comments as appropriate. However, issuers often do not request this protection. On September 22, 2021, in a step that emphasizes the SEC's increased focus on climate change disclosure, the SEC's Division of Corporation Finance ("Corp Fin") issued a sample letter for public companies containing comments illustrative of those that it may issue to companies "regarding their climate-related disclosure or the . Change Disclosures. Management indicated that review of foreign filers was facilitated in an effort to encourage foreign issuers to register their securities with U.S. markets. Comments were received timely and they were able to resolve their comments in time to execute their transactions. We collected data primarily through six workshops (fifty-six staff or approximately 17% of Division personnel participated in the workshops). These letters set forth staff positions and do not constitute an official expression of the SECs views. CEO survey: US CEOs brace for a recession of unknown magnitude. 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. Currently, the two-week timeframe is only provided in unusual cases. The Division has training for new staff examiners and accountants. business, risk factors, and MD&A, and (3) the use of comments to elicit If you have any questions pertaining to any of the cookies, please contact us us_viewpoint.support@pwc.com. Insights. This brought all comments about a particular issue together in one document and facilitated discussion and evaluation of the issues. Also, in August 1995, the Chairman organized the Task Force on Disclosure Simplification to review and streamline regulations relating to forms and disclosure requirements. 6LinkedIn 8 Email Updates, Appendix A - Control Self Assessment Methodology. Heres how the numbers have Resolve Comments CFGI analyzed 200 comments made by the SEC staff on companies' financial statements and disclosures, made in Management's Discussion & Analysis filed on Form 10-Q and Form 10-K. However, review of filings and comments by reviewers mitigate this risk. All rights reserved. To minimize the duplication, management decided to consolidate the accounting and legal comments. In fact, some participants felt they were penalized for their lower production numbers resulting from processing larger, more complex filings than those used in setting the performance standards. Despite the differences in the ratings, the participants believed that, taken as a whole, the Division was achieving its primary objective to improve disclosure to investors. 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. Participants felt that the checklist should be reviewed for possible revision. On the other hand, staff described a number of concerns. The Division should remind issuers of the rules available to protect any proprietary supplemental information they provide to the Division and the procedures used to request the special handling. Each member firm is a separate legal entity. Their comments and the results of meetings to discuss the worksheets preceded the preparation of the audit report. remember settings), Performance cookies to measure the website's performance and improve your experience, Marketing/Targeting cookies which are set by third parties with whom we execute marketing campaigns and allow us to provide you with content relevant to you. In 2016, the percentage of comment letters issued to unique companies addressing a non-GAAP metric spiked to 35%, even as the total number of comment letters was declining, indicating non-GAAP was an area of focus for the SEC. Executive Summary For example, in 2010 the staff issued (1) periodic updates to the The participants in the workshops expressed a desire for better communication of Division filing review policies from management to staff; more consistent treatment of filing issues; clearer definition of accountant, examiner, and reviewer responsibilities; and re-evaluation of the filing examination report format. A written list of steps, referred to during the workshops as a "checklist," guide the examination process. We bring together extraordinary people, like you, to build a better working world. Anonymous. Executive Summary. This is a good time to review your policies and procedures to ensure the policies properly address the firms business activities and comply with the provisions of the recordkeeping rule. Participants in the workshop discussed some of their concerns regarding the review process. 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. Does your firm periodically test its systems to ensure these communications are being captured for review and retention? Informing your decision-making. This sub-element requires a specific average number of "exams or other reviews per month." addition, we expect the number of comments to grow next year because of a rise Staff requests futures comments when the improvements are not immediately consequential, but will improve disclosure. We asked participants for their opinions on the pluses and minuses of working for the Commission, specifically the Division. Responding to a comment letter? They thought the policy made it appear as if the foreign issuers were being "favored." Information in this publication is based on 5 The Commission is generally implementing the supporting objective. Also prior to the workshops, the auditors developed sets of questions that related to each objective. Smarsh is a registered trademark of Smarsh Inc. in the European Union. Enabled by data and technology, our services and solutions provide trust through assurance and help clients transform, grow and operate. Participants were asked to describe risks in the examination report/draft comment process. was issued. 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. In addition to cookies that are strictly necessary to operate this website, we use the following types of cookies to improve your experience and our services: Functional cookies to enhance your experience (e.g. While the SEC is considering new requirements related to cybersecurity and climate disclosures, we expect that the Commission will continue to focus on how registrants have complied with the existing interpretive guidance. Participants were generally pleased with the training they received. Proquest LLC. Prior to joining Smarsh, Marianna worked for BNY Mellon and Invesco where she was an instrumental member on compliance teams.Marianna has also served as an adjunct professor at New York Career Institute where she taught Law Office Management and Real Estate Law. The Securities and Exchange Commission's Office of Inspector General (Office) evaluated the Division of Corporation Finance's (Division) comment letter process.