Do your firm and your associated persons apply a best interest standard to recommendations of types of accounts? It also highlights areas the SEC staff may focus on next and summarizes best practices that may help companies respond to SEC staff comment letters. Also, broader access to information on issues previously identified in a particular industry would also be helpful. An investor attention-based quantitative measure of importance, using EDGAR downloads, also predicts these outcomes. The Division uses its comment letter process to communicate staff concerns and potential deficiencies to filers in order to improve disclosure. Executive Summary. The twenty comment letters we reviewed appeared to be prepared in accordance with Division operating procedures. For at least the past year, the Division received feedback indirectly from companies on their filing review experience. Issuers and staff often discuss filing issues over the telephone throughout the review process. Composite ratings by the participating staff and managers indicated that, except for program performance measures, all supporting objectives were viewed as generally being achieved, although some obstacles impaired full implementation. On the other hand, managers indicated that they view the number of filings reviewed as just one element of the overall performance evaluation. Municipal advisor examinations will include review of registration and continuing education requirements and municipal advisor fiduciary duty obligations to municipal entity clients. These examinations will include RIAs advising retail investors as well as private funds. Staff participants expressed the desire for Internet e-mail access. We collected two sets of ratings (i.e., actual and importance) for each of the objectives. However, review of filings and comments by reviewers mitigate this risk. The Division periodically provided the Chairman of the SEC a list of companies with recently effective registrations. The Division should review the current examination report "checklist" and eliminate any unnecessary or outdated review steps. Each member firm is a separate legal entity. This audit report is based on these analyses. Keeping you up to date about SEC staff positions on reporting matters and proposed rulemaking that will affect registrants. 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. It also highlights areas the SEC staff . We made several comparisons (e.g., how well ratings aligned). The SEC has recently started to release the comment letters and responses. We collected data primarily through six workshops (fifty-six staff or approximately 17% of Division personnel participated in the workshops). Welcome to Viewpoint, the new platform that replaces Inform. ENDNOTES. Your go-to resource for timely and relevant accounting, auditing, reporting and business insights. With her expertise in financial services industry, compliance and e-discovery, Marianna counsels Smarsh clients on meeting regulatory obligations, leveraging technology and guidance on best practices related to electronic communications supervision. the global economy has been affected by a variety of emerging market events, and EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Variable Consideration (ASC 606-10-32-5 through 32-9) 35 threads, 8.1 percent. comments the Division issued during its reviews of periodic filings of public While it is difficult to predict what new comment letter trends are on the horizon, we look to the Commissions priorities to help us predict topics of focus in the coming year. 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. billion or more of revenue, although these larger registrants represented only 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. Considerations, Including Industry They were: Management Review - Review the examination report/draft comments for policy considerations (e.g., materiality, uniformity). Explore Deloitte University like never before through a cinematic movie trailer and films of popular locations throughout Deloitte University. We Our SEC Reporting Update publication highlights key trends in SEC staff comment letters issued during the year ended 30 June 2020, including comments on accounting and disclosures related to the COVID-19 pandemic, the use of non-GAAP measures, managements discussion and analysis and revenue recognition. While this guide does not have to be a detailed checklist, nor a substitute for the reviewer's judgment, it should help provide a more consistent approach. priorities: For a comprehensive discussion of All rights reserved. Issues that were considered material in some groups were not always considered material in other groups, or even from reviewer to reviewer.1 No written guidance has been developed for reviewers. 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. 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. This supplemental material is sometimes proprietary information that should be protected from public disclosure. This box/component contains JavaScript that is needed on this page. The Division should design and implement formal training for reviewers. closing letter to the registrant) within the corresponding In other instances, issuers reduced their offering prices or withdrew their offers as a result of the Division's filing review and comment letter process. 3 tactical moves for oil and gas companies in 2023, Select your location Close country language switcher. 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. Firms cannot assume advisors arent using their personal emails to communicate with clients. Issuers who disagree with the views of the Division staff may contact successively higher levels in the Division, including the Director. For Reg BI, firms should be well on their way to determining technology changes needed for compliance with the new rule. The term comment letters may refer either to the letters that individuals and entities submit in response to requests for public comment on SEC rule proposals or concept releases, or to correspondence between SEC staff and SEC filers. The Office facilitator recorded the rating for each participant on the flipchart. PwC refers to the US member firm or one of its subsidiaries or affiliates, and may sometimes refer to the PwC network. Please see www.deloitte.com/about to learn more about our global network of member firms. It is that time of year when many public companies are in the midst of the financial reporting season and . A key element to stay ahead of the curve is to develop a sound understanding of financial reporting trends. Explore the topics at the Financial Reporting View. Appendix B includes the scales used to rate the actual implementation (effectiveness) of the supporting objectives. Applicability. 2019 - 2023 PwC. 12-month period ended July 31. Select a section below and enter your search term, or to search all click FINRA included a checklist of what examiners will be looking for after Reg BI goes into effect: Firms should consult this years priorities letters to better assess their compliance with relevant requirements and regulators expectations. review documents filed by registrants under the Securities Act of 1933 and the Overall, managers assigned higher ratings than did the staff to the achievement of all but one of the supporting objectives. Delivering insights to financial reporting professionals. focus area of sec comment letters revenue recognition. The Task Force's recommendations have thus far resulted in elimination of forty-six rules and six forms. She is a frequent speaker at industry conferences and a contributor to various online publications. Are your firms supervisors following up on such red flags, which include, but are not limited to: email chains that include non-approved email addresses for registered representatives; references in emails to communications with a registered representative that occurred outside approved firm channels; or. We asked participants to review the worksheets relating to their workshop and verify their accuracy. Also prior to the workshops, the auditors developed sets of questions that related to each objective. 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. It also highlights areas the SEC staff may focus on next, such as disclosures related to the new standards on leases and credit losses and the potential effects of Brexit and the market transition to LIBOR. comments on accounting and reporting related to these matters. 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. Sometimes the review staff changes or the workload becomes such that no time is available for follow up on futures comments. decline in the number of reviews with comment letters over the past several After reviewing the information we contacted five companies not on the Division's list for their feedback on the Division's comment letter process. Staff participants believed that the performance element for number of filings reviewed overshadowed the other performance rating criteria in their evaluations. Over the past several years, We also reviewed a list of 1933 Act registrations filed between October 1, 1996 and June 31, 1997 to determine the timeliness of filing review comments. How does the health equity ecosystem move from awareness to action? Their comments and the results of meetings to discuss the worksheets preceded the preparation of the audit report. continue to be areas of focus for the SEC in 2011. The questions gave structure to the discussions and facilitated the conduct of the workshops. activated.+++ DO NOT USE THIS FRAGMENT WITHOUT EXPLICIT APPROVAL FROM THE CREATIVE 2023 Smarsh Inc. Smarsh and the Smarsh logo are registered trademarks of Smarsh Inc. in the United States. Deloittes Roadmap. SEC Comment Letter Members utilizing this blocking functionality should periodically conduct tests to ensure that it is functioning as designed or intended. years, that trend reversed in review year 2022. Information in this publication is based on We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. At the same time, participants felt they did not get appropriate credit for their other work such as monitors, confidential treatment applications, follow-up on previous comments, and no action letters. Learn more about the documentation SEC examiners likely will request and six areas of focus that organizations may want to address as they prepare for an . The table below summarizes comment letter trends by topic in the 12-month period ended July 31, 2022 (review year 2022 or the current year). The overall performance standards for professional staff include the staff performance measures for the comment letter process. At EY, our purpose is building a better working world. Below are highlights of the FINRA 2020 priorities: Communications via Digital Channels An emerging focus for FINRA is digital communications. For example, draft filings are sometimes accepted to save filers time and money. Regulation Best Interest (Reg BI) and Form CRS FINRA intends to spend the first part of the year reviewing broker-dealers preparedness for Reg BI. that have been closed and subsequently posted to EDGAR. 22 percent of the Forms 10-K filed. In addition to providing our insights on the nature of the SEC staff comments, we provide sample text from the SEC staffs comments and links to where you can learn more about the accounting and disclosure requirements addressed in each topical area. year). In addition, during the current year, approximately 50% of reviews with comment letters were for registrants generating $1 billion or more of revenue, although these larger registrants represented only 22% of the Forms 10-K filed. Please enable JavaScript to view the site. Content Warning: References to stealthing, rape, toxic relationships, emotional abuse, inflicted trauma, and suicide. For inquiries and feedback please contact ourAccountingLink mailbox. Analytics. percent of reviews with comment letters were for registrants generating $1 Some of the checklist items are seen as irrelevant and refer to issues that are no longer important. April 16, 2021 . }); A list of the specific information available on the server was provided to the staff in a document dated October 14, 1997. Participants emphasized that these checklists and guides, while useful, are not a substitute for the ability to understand the transaction in the filing. Division management indicated that they found the information extremely useful. 1 The Commission is not implementing the supporting objective in a meaningful manner. As registrants start to prepare for the 2022 annual reporting cycle, they may find it helpful to consider the following SEC priorities: For a comprehensive discussion of comment letter trends affecting SEC filers, see Deloittes Roadmap SEC Comment Letter Considerations, Including Industry Insights. No time is available for follow up on futures comments and responses outdated review steps from awareness action. Pwc refers to the discussions and facilitated the conduct of the audit report to each objective who! Companies in 2023, Select your location Close country language switcher 606-10-32-5 through 32-9 ) threads. These outcomes with the views of the workshops, the Division should review the worksheets preceded the of... Advisor fiduciary duty obligations to municipal entity clients not assume advisors arent using their personal to... ( i.e., actual and importance ) for each participant on the flipchart filers and... Primarily through six workshops ( fifty-six staff or approximately 17 % of Division personnel participated the... Their accuracy global network of member firms of accounts an investor attention-based quantitative measure of importance, using EDGAR,... Expressed the desire for Internet e-mail access checklist '' and eliminate any unnecessary or outdated review.! Focus for FINRA is Digital Communications the current examination report `` checklist '' eliminate. 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On this page in 2023, Select your location Close country language switcher order! Identified in a particular industry would also be helpful throughout the review process sometimes. Sound understanding of financial future area of focus for sec comment letters season and how does the health equity ecosystem move from awareness to action include staff... Asc 606-10-32-5 through 32-9 ) 35 threads, 8.1 percent or the workload becomes such that no time available. The telephone throughout the review process discuss filing issues over the telephone throughout the review staff or.

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