Municipal advisor examinations will include review of registration and continuing education requirements and municipal advisor fiduciary duty obligations to municipal entity clients. Very limited successful actions for implementation exist and obstacles are so prevalent that the unit is significantly impaired from implementing the supporting objective. SEC Comment Letter comment letters that were closed (i.e., the SEC issued a Audit Results Read our best practices here: SEC comment letter trends for financial services companies. John is a senior consultation partner in the SEC services team in Deloitte & Touche LLPs National Office Accounting & Reporting Services group and is a member of the Consolidations team. Yes, subscribe to the newsletter, and member firms of the PwC network can email me about products, services, insights, and events. Cybersecurity, strategy, risk, compliance and resilience, Value creation, preservation and recovery, Explore Transactions and corporate finance, Climate change and sustainability services, Strategy, transaction and transformation consulting, Real estate, hospitality and construction, How blockchain helped a gaming platform become a game changer, How to use IoT and data to transform the economics of a sport, M&A strategy helped a leading Nordic SaaS business grow. At EY, our purpose is building a better working world. May be different upon comparisons with the Another letter signed by over five hundred investors, foundations, companies, lawmakers, and NGOs, expresses support for SEC rulemaking by noting that "climate change poses a variety of material risks to companies of all sizes in all industries across our nation.". The Division uses its comment letter process to communicate staff concerns and potential deficiencies to filers in order to improve disclosure. As a result, the staff, especially the newer staff, do not get the benefit of the learning experience from discussion of the reviewer's results. During each workshop, Office staff summarized participant discussions regarding successes, obstacles, and recommendations for each objective. 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. She is a frequent speaker at industry conferences and a contributor to various online publications. Although issuers do not always agree with the Division's proposed changes, they generally still make them. The field work was performed between May and October 1997 in accordance with generally accepted government auditing standards. Partner, Dept. the global economy has been affected by a variety of emerging market events, and Ratings for this objective indicate that participants feel that the objective is generally implemented, but that some obstacles impair full implementation of this supporting objective. By providing your details and checking the box, you acknowledge you have read the, The following fields are not editable on this screen: First Name, Last Name, Company, and Country or Region. According to management, the benefit of improving reviews of a smaller number of filings would not justify the loss of reviewing a larger number of filings, albeit at only the current quality level. Our analysis of SEC comment letters issued in relation to Form 10-K and Form 10-Q filings . Enabled by data and technology, our services and solutions provide trust through assurance and help clients transform, grow and operate. This brought all comments about a particular issue together in one document and facilitated discussion and evaluation of the issues. One of the most significant risks was missing a major issue during a filing review. Several participants suggested separating legal and accounting comments in the comment letter. The insights and services we provide help to create long-term value for clients, people and society, and to build trust in the capital markets. Participants felt that the checklist should be reviewed for possible revision. Do not delete! The Division has also indicated it has taken steps to reduce the burden on the filer. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. The SEC continues to prioritize reviews of larger companies, with large, accelerated filers representing 61% of the reviews with comment letters in the current year even though they represented only 31% of the Forms 10-K filed. Most of the participants also indicated that they felt a strong sense of responsibility to the investing public and a desire to live up to the Division's, as well as the Commission's, expectations. Program performance measures are used to measure and evaluate the performance of the review of filings. 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. complied with the existing interpretive guidance. focus area of sec comment letters revenue recognition. All rights reserved. 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. STUDIO DEVELOPMENT TEAM +++. 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. All rights reserved. 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. The standards include six general categories. PwC refers to the US member firm or one of its subsidiaries or affiliates, and may sometimes refer to the PwC network. By continuing to browse this site, you consent to the use of cookies. include registrant responses. These audit steps are described in further detail in Appendix A. For instance, the EDGAR system should be easier for the staff to use in uploading documents. Registered representatives and customers use of an increasingly broad array of digital communication channels (e.g., texting, messaging, social media, collaboration applications) may pose challenges to a firms ability to comply with obligations related to the review and retention of such communications. As registrants start to prepare for the 2022 This box/component contains code No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. Review ourcookie policyfor more information. Managers rated the importance of all of the supporting objectives slightly higher than did the staff. 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 . 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. years, that trend reversed in review year 2022. PwC. All rights reserved. How does the health equity ecosystem move from awareness to action? 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. Change Disclosures. The Control Self Assessment (CSA) methodology used 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. In each episode of our 2022 SEC comment letter trends series, our guests bring you the latest themes in comment letters from the SEC's Division of Corporation Finance. Heres how the numbers have played out over the past five years: As the chart above illustrates, while there has been a notable decline in the number of reviews with comment letters over the past several years, that trend reversed in review year 2022. Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee ("DTTL"), its network of member firms, and their related entities. Comments may consist of requests for supplemental information, amendments to filings, or improvements in future filings (futures comments). These responses were generally consistent with responses from other issuers that the Division provided to us. Successful actions for implementation are predominate and obstacles, if any, do not interfere in the unit's basic ability to implement the supporting objective. For at least the past year, the Division received feedback indirectly from companies on their filing review experience. The global business landscape has been changing rapidly, with the Each success, obstacle, and recommendation was then coded and electronically transferred to a "resulting issue worksheet." Both management and staff gave low ratings to the achievement of the program performance measures objective (management - 3.90, staff - 3.32). EY helps clients create long-term value for all stakeholders. Staff Performance Measures - Evaluate staff performance in the comment letter process to improve individual and program performance. See Terms of Use for more information. Some participants felt that some reviewers change the comments on a filing, or insert new comments, without notifying them. 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. Participants agreed that the Division uses the number of filings reviewed as its primary performance measure. Cultivating a sustainable and prosperous future, Real-world client stories of purpose and impact, Key opportunities, trends, and challenges, Go straight to smart with daily updates on your mobile device, See what's happening this week and the impact on your business. How do you move long-term value creation from ambition to action. The analysis herein summarizes the comments the Division issued during its reviews of periodic filings of public companies. Sub-elements relating to the comment letter process are distributed throughout the six general categories. referred to generally as filings). The Division periodically provided the Chairman of the SEC a list of companies with recently effective registrations. They also felt that the training manual was improved. We obtained and analyzed information concerning successes, obstacles, recommendations, and effectiveness ratings related to the primary objective and six supporting objectives identified by the Division for the comment letter process. are on the horizon, we look to the Commissions priorities to help us predict Participants indicated that improving these characteristics in the staff as a whole would also improve the comment letter process. Our review results indicated that the Division issued comments within its 30 day timeframe on approximately 88% of the registrations in our sample receiving full reviews and approximately 98% of the registrations receiving a monitor for one or more specific items. [Appendix B contains the rating criteria used by the participants.] Division of Forms 10-K, 10-K/A, 10-Q, and 10-Q/A (which are years and may issue comments to such registrants. The focus of our analysis related to the Financial Statements, footnotes and related disclosures made in Management's Discussion & Analysis filed on Form 10-Q and Form 10-K of companies with a market capitalization between $100 million and $1 billion. To help the SEC meet its responsibilities under the Sarbanes-Oxley Act, The table below summarizes comment letter trends by topic in the By Jeremy Simons. One of the general categories include a sub-element regarding number of filings reviewed. comments the Division issued during its reviews of periodic filings of public If you require a printed version of this document contact the United States Securities and Exchange Commission, Office of Inspector General, Mail Stop 11-7, 450 Fifth Street N.W., Washington, D.C. 20549 or call (202) 942-4460. Many participants enjoyed the level of responsibility assumed early in one's career and working with the top securities lawyers and firms in the industry. Considerations, Including Industry Accordingly, the statistics presented may be affected by Dina Bass. 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. Given the recent amendments to the rules governing MD&A, we expect comments on this topic to remain high. The supporting objectives reflect activities that increase the chances of achieving the primary objective. 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. Workshop discussions indicated that this supporting objective received low scores from participants because of concern with the Division's use of number of filings reviewed as its primary measure of program performance. 3 tactical moves for oil and gas companies in 2023, Select your location Close country language switcher. Number of SEC comment letters by year . For instance, the training concerned with accounting proposals, while interesting, was not viewed as particularly useful. Anonymous. attributable to increased transaction activity related to traditional initial 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. future area of focus for sec comment letters. Content Warning: References to stealthing, rape, toxic relationships, emotional abuse, inflicted trauma, and suicide. 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. The composite ratings for how well the participants felt that the Division actually achieved its six supporting objectives were as follows: An important theme, expressed overwhelmingly by the participants, was the personal commitment of Division employees to maintain high standards of quality in filing reviews. After each workshop, the auditors typed the summary successes, obstacles, and recommendations from the flipcharts to a formatted word-processing document (one page per objective). Participants emphasized that these checklists and guides, while useful, are not a substitute for the ability to understand the transaction in the filing. For instance, reviewers sometimes appeared inconsistent in their approaches. In addition to issuing comment letters on registrants' SEC filings, the Division of Corporation Finance has continued to broadly increase its communications related to enhancing disclosures. 2 For example, the Division contends that as a result of staff comments in FY 1996, forty-one companies were required to restate their income. Consider removing one of your current favorites in order to to add a new one. Program Performance Measures Each general category contains an average of five sub-elements. Explore Deloitte University like never before through a cinematic movie trailer and films of popular locations throughout Deloitte University. 3 The Commission is generally not implementing the supporting objective. The Division should use more outcome-based program performance measures to gauge the success of the comment letter process. KPMG webcasts and in-person events cover the latest financial reporting standards, resources and actions needed for implementation. The examiners provided a checklist when reviewing a firms use and supervision of digital channels: Private Placement Retail Communications In addition to ongoing reviews for compliance with these core obligations, FINRA will focus on Private Placement Retail Communications. 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. 5 The supporting objective is relatively important and it should be generally implemented at the Commission. Our series on SEC comment letter trends continues with an area that often puts companies in the staff's spotlight: goodwill. Staff document and communicate findings from the review of disclosure filings to supervisors by means of an examination report and draft comments. The filings are received by the Commission, sent to the Division, and then screened for review. The "resulting issue" worksheets were given to management to review. At Deloitte, our purpose is to make an impact that matters by creating trust and confidence in a more equitable society. Our analysis of SEC comment letters issued in relation to Form 10-K and Form 10-Q filings identifies the frequency of topical areas addressed by the SEC staff and how their focus areas changed over time. 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 . 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. In the letters, the regulators highlighted technology-related topics while also focusing on existing priorities, reminding firms of the need to adopt comprehensive supervisory processes that will ensure compliance and exam preparedness. annual reporting cycle, they may find it helpful to consider the following SEC Responding to a comment letter? Quantitative Analysis However, they also indicated that the training needed to focus more on the work that the staff actually performed. We help fill the void in the literature by examining the influence of SEC comment letters on one type of transactional . We collected data primarily through six workshops (fifty-six staff or approximately 17% of Division personnel participated in the workshops). 27 11. future area of focus for sec comment letterschucks and pearls meaning. 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. Publication date: 30 Jun 2022. us SEC Comment Letter Trends. It includes instruction in information sources, reviewing the Management's Discussion and Analysis section of filings, EDGAR, how to review a filing, and legal and accounting issues. The number of filings reviewed measures the amount of work performed by the review staff, but does not gauge the effect of the comments on filing disclosures as well as outcome-based measures. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. 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. Outline whether employees have the ability to communicate via email through means other than their firm email address and through third-party communication systems such as Bloomberg and Reuters. The Commission is currently seeking a contractor to modernize EDGAR. The Division gave us information on issuers that were contacted by the Chairman within the past year for their views on the filing review process. In addition, we reviewed twenty comment letters to determine if they were prepared in accordance with Division operating procedures. This sample comment letter follows a recent increase in climate-related . 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. Review the firms practices, policies, and procedures to confirm that these address the enforcement priorities. Also, some reviewers are seen as not willing to discuss their review results with the staff. However, adequate review coverage of issuer filings, given limited staff resources, is essential to the mission of the Division. Tell us about yourself, and well be in touch right away. Your go-to resource for timely and relevant accounting, auditing, reporting and business insights. We The checklist is generally the same for all the industry groups. These factors are crucial to an effective program. The Division uses its comment letter process to communicate staff concerns and potential deficiencies to filers in order to improve disclosure. PwC. 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. This includes 10,589 comments that the SEC itself identified as form letters, and another 1,715 apparently individualized comments that were actually form letters. to continue monitoring the effects of the COVID-19 pandemic, the Russia-Ukraine In-depth analysis, examples and insights to give you an advantage in understanding the requirements and implications of financial reporting issues. Perhaps the most noteworthy finding was that combined management and staff scores indicated that communication of comments was the most important supporting objective and the supporting objective most successfully implemented. This includes retention of electronic communications such as email, text messages, instant messages, social media, and collaboration tools. 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 . Please reach out to, Effective dates of FASB standards - non PBEs, Business combinations and noncontrolling interests, Equity method investments and joint ventures, IFRS and US GAAP: Similarities and differences, Insurance contracts for insurance entities (post ASU 2018-12), Insurance contracts for insurance entities (pre ASU 2018-12), Investments in debt and equity securities (pre ASU 2016-13), Loans and investments (post ASU 2016-13 and ASC 326), Revenue from contracts with customers (ASC 606), Transfers and servicing of financial assets, Compliance and Disclosure Interpretations (C&DIs), Securities Act and Exchange act Industry Guides, Corporate Finance Disclosure Guidance Topics, Center for Audit Quality Meeting Highlights, Insurance contracts by insurance and reinsurance entities, industry-specific SEC comment letter trends, {{favoriteList.country}} {{favoriteList.content}}. Importance. us SEC Comment Letter Trends. Former San Antonio-area stock broker and investment adviser Matthew A. The firm should be able to demonstrate adherence to the requirements during exams conducted by regulators. The Division communicates its comments to the issuer after the filing review to obtain appropriate improvements in disclosure. _______________________, STAY CONNECTED Comment Letters. The growing number and complexity of cybersecurity risks facing investment advisers (IAs) have triggered an increased interest in cyber risk management by the SEC, including a planned sweep of more than 50 registered IAs and broker-dealers. A SPAC is a newly formed company that raises cash in an 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. The applicable policy is dated August 19, 1997. 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. This means firms need to capture, archive, and supervise all written business communications. 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. 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. By clicking "submit", you consent to Smarsh processing your information and storing it in accordance with the Privacy Policy and agree to receive communications from Smarsh and its third-party partners regarding products and services that may be of interest to you. April 16, 2021 . Once you have viewed this piece of content, to ensure you can access the content most relevant to you, please confirm your territory. We asked participants to review the worksheets relating to their workshop and verify their accuracy. Technology continues to be a key theme for the regulators. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. Social login not available on Microsoft Edge browser at this time. This document is an HTML formatted version of a printed document. Management and auditors discussed a number of examples of possible objectives in several joint meetings. 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. Our analysis of SEC comment letters identifies the frequency of topical areas addressed by the SEC staff and how their focus areas changed over time. Workshop participants agreed that the current process works well in resolving comments. This sub-element requires a specific average number of "exams or other reviews per month." The staffs comments are in response to a companys disclosure and other public information and are based on the staffs understanding of that companys facts and circumstances. The SEC continues to prioritize reviews of larger companies, In these unprecedented times, the SEC continues to provide registrants with proactive guidance as needed and to conduct ongoing reviews and oversight to protect investors. EY | Assurance | Consulting | Strategy and Transactions | Tax. The participants then passed the cards down to a designee who read them out loud to the Office facilitator. 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. Audit Methodology window.drift.api.startInteraction({ interactionId: 90922 }); Click on a trend or select a trend from the table of contents to learn more. Staff requests futures comments when the improvements are not immediately consequential, but will improve disclosure. ttp://www.sec.gov/answers/commentletters.htm. expanded disclosures related to emerging issues. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. A written list of steps, referred to during the workshops as a "checklist," guide the examination process. Communicate Staff Findings After reviewing this information, the Office then contacted an additional five companies for their feedback on the Division's comment letter process. The checklist is a response to a prior General Accounting Office recommendation that the Division document its review of filings. 1 Twitter 2 Facebook 3RSS 4YouTube Does your firm have a process in place to evaluate new tools available to your registered representatives to determine whether there are digital communications channels that should be captured, included in your firms routine electronic communications supervisory reviews, and stored in accordance with books and records requirements? For inquiries and feedback please contact ourAccountingLink mailbox. Source: Audit Analytics SEC UPLOAD of comment letters related to Forms 10 -K and 10 -Q that were publicly available during the 12 -month periods ended on 30 June each year. Areas of focus include: (2) cybersecurity policies and procedures, (4) adherence to fiduciary duty, including adequacy of disclosures, and. You can set the default content filter to expand search across territories. 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. in the 2022 edition of this publication: Was derived from data provided by Audit Some of the checklist items are seen as irrelevant and refer to issues that are no longer important. In the United States, Deloitte refers to one or more of the US member firms of DTTL, their related entities that operate using the "Deloitte" name in the United States and their respective affiliates. Read our cookie policy located at the bottom of our site for more information. This content is copyright protected. The review staff faxes comments to the issuer, generally with a follow-up copy by mail. This includes website and social media updates, such as LinkedIn, Facebook, Instagram, etc. See how we connect, collaborate, and drive impact across various locations. This also gave management a better understanding of the audit results, since they also analyzed the resulting issue worksheets. This message will not be visible when page is Participants indicated that a more direct link between the training and the filings they actually review would make the training more effective. Consider removing one of your current favorites in order to to add a new one. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities. 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. Participants also valued the extent to which they exercised judgment in their work. This supplemental material is sometimes proprietary information that should be protected from public disclosure. EY is a global leader in assurance, consulting, strategy and transactions, and tax services. "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 . For more information about our organization, please visit ey.com. Select a section below and enter your search term, or to search all click In addition, during the current year, approximately 50% of reviews with comment letters were for registrants . The Task Force's recommendations have thus far resulted in elimination of forty-six rules and six forms. In addition, during the current year, approximately 50 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 . 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. We expect these factors to affect the volume of comments next year as well. By continuing to browse this site, you consent to the use of cookies. that have been closed and subsequently posted to EDGAR. Explore the topics at the Financial Reporting View. reviews were closed and posted to EDGAR after that edition Please see www.pwc.com/structure for further details. Division management and the Office staff reviewed the forty-two resulting issue worksheets. Areas of focus include: (1) SEC registration eligibility, (2) cybersecurity policies and procedures, (3) marketing practices, (4) adherence to fiduciary duty, including adequacy of disclosures, and. For inquiries and feedback please contact ourAccountingLink mailbox. reviews that are still ongoing or have recently been 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. Please enable JavaScript to view the site. 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. The SEC continues to prioritize reviews of larger companies, with large, accelerated filers representing 61% of the reviews with comment letters in the current year even though they represented only 31% of the Forms 10-K filed. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. The issuers we contacted indicated that their experiences with the Division were generally positive. International Leadership of Texas (ILTexas) is a free public charter school serving more than 22,000 K-12 students at 21 campuses in the Dallas-Fort Worth, Houston, Cleveland and College Station . Copyright 2023 Deloitte Development LLC. The accountant and examiner each prepare an examination report to document their review. An outcome measure assesses the actual results, effects, or impact of a program activity compared to its intended purpose. We use cookies to personalize content and to provide you with an improved user experience. Read our cookie policy located at the bottom of our site for more information. For example, in 2010 the staff issued (1) periodic updates to the Focus Areas Relating to Investment Advisers, Investment Companies, Broker-Dealers, and Municipal Advisors OCIE will continue its risk-based examinations for each type of these registered entities. influence comment letter trends. Click here to extend your session to continue reading our licensed content, if not, you will be automatically logged off. DTTL and each of its member firms are legally separate and independent entities. Does your firm have policies and procedures in place regarding the filing, updating, and delivery of Form CRS. Since mid-2021, the SEC has issued at least three comment letters asking companies to address climate disclosure in the general disclosure section of their filings. You can create keywords and key phrases to flag the risk of advisors using unauthorized communication channels. 5 A sample comment letter posted on the . In turn, the Chairman contacted some of the companies for feedback on their experience with the Division's filing review process. These recommendations include updating review guidance as appropriate, designing and implementing formal training for reviewers, and improving the use of outcome-based program performance measures. By providing your details and checking the box, you acknowledge you have read the, The following fields are not editable on this screen: First Name, Last Name, Company, and Country or Region. In response, management indicated that accounting and legal comments were, at one time, presented separately in the comment letters. Does your firm have policies and procedures to identify and address conflicts of interest? This message will not be visible when page is activated. Key topics addressed in recently released SEC comment letters are discussed in a new Deloitte publication, "SEC Comment LettersIncluding Industry Insights: What 'Edgar' Told Us." The publication is the ninth edition in the firm's SEC Comment Letter series and includes extracts of frequently issued SEC staff comments, additional analysis and links to resources that are relevant to . Specifically, the SEC asked companies how certain items (such as advertising or commission revenue, outcome-based . Please see www.deloitte.com/about to learn more about our global network of member firms. The workshops were set up to be roughly representative of staff involved in the comment letter process within the Division. proactive guidance as needed and to conduct ongoing reviews and oversight to protect Prior research on SEC comment letters has almost exclusively focused on reviews of periodic filings, such as 10-Ks. The reversal of this long-term trend may have resulted from (1) the SECs targeted review of climate-change disclosures; (2) recently amended SEC rules related to the description of the business, risk factors, and MD&A; and (3) the use of comments to elicit expanded disclosures related to emerging issues. The facilitator then repeated the procedure to rate how important (or desirable) the participants thought the objective was. Also, broader access to information on issues previously identified in a particular industry would also be helpful. Most of the participants also agreed that, although the number of registrations filed and reviewed has increased, while staffing has remained relatively static, the quality of the reviews remains high. It also highlights areas the SEC staff . Do your firm and your associated persons apply a best interest standard to recommendations of types of accounts? The workshop participants discussed and anonymously rated each supporting objective. The SECs office of compliance inspections and examinations (OCIE) released its 2020 exam priorities. 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. Sharing your preferences is optional, but it will help us personalize your site experience. 1 The supporting objective is not important and should not be implemented at the Commission. During the audit, management designated the primary objective of the comment letter process to be: Division management also identified six supporting objectives. The insights and services we provide help to create long-term value for clients, people and society, and to build trust in the capital markets. Management indicated that the reviewer should give the review staff a copy of the comments that were issued. Securities Exchange Act of 1934. They generally rated training on new releases as good. It is for your own use only - do not redistribute. Investment company examinations will focus on mutual funds and exchange-traded funds, the activities of their RIAs, and the oversight practices of their boards of directors. Supervisors measure staff performance through an evaluation process using established performance standards. Executive Summary. Financial_services_DM. Misalignment between information sources will send up red flags and that means comment letters that can significantly set back the IPO timeline. 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. 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. You may withdraw your consent at any time by emailing [email protected]. acquisition of a private operating company. Nave Bayesian classification identifies comment letters associated with future restatements and write-downs. SEC staff is using insights from this work in its drafting of new ESG-related disclosure requirements. communicating that its review is complete. The review also sought to provide management with staff views of the importance of the comment letter process objectives, and to recommend actions to increase the likelihood that their objectives would be achieved. Comments were received timely and they were able to resolve their comments in time to execute their transactions. billion or more of revenue, although these larger registrants represented only 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. 17 The number of SEC comment . 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. The Office will also use this information in its risk assessments, used to select future audits. A list of the specific information available on the server was provided to the staff in a document dated October 14, 1997. Public comment letters relating to SEC rulemaking and regulatory actions are found in the Regulatory Actions section of the SECs Web site. Assistant Directors (ADs) review the most complex filing issues. 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). 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. The composite ratings above of actual achievement by the participating managers and staff indicated that, except for program performance measures, the supporting objectives were generally being achieved, although some obstacles were impairing full implementation. Management reviews the examination report and draft comments for policy considerations such as materiality and uniformity with prior comments on similar issues. Welcome to the Deloitte Accounting Research Tool (DART). in the number of public companies over the past several years, which is largely The comparisons included analysis of management versus staff, actual achievement versus importance, and opportunities for improvement. result in increased focus and scrutiny from the SEC staff. Does your firm have procedures and training in place to assess recommendations using a best interest standard? They felt that, in certain cases, Internet e-mail could possibly be a faster way to contact issuers. These participants described instances where they were embarrassed when an issuer contacted them about a comment they knew nothing about, because the reviewer inserted it without their knowledge. 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. Examples include: send to my personal email, respond to my gmail account, text me, lets take this offline. These common phrases are indicative of the risk of using unauthorized communication channels. The staff should then review what was issued and obtain any necessary explanations. How do you move long-term value creation from ambition to action. Other industry groups have manuals containing guidance on issues specific to that industry. Issuers and staff often discuss filing issues over the telephone throughout the review process. (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 . The printed document may contain agency comments, charts, photographs, appendices, footnotes and page numbers which may not be reproduced in this electronic version. Fullwidth SCC. The mean (median) number of comment letter rounds is 1.5 (1.0). In addition, we expect the number of comments to grow next year because of a rise in the number of public companies over the past several years, which is largely attributable to increased transaction activity related to traditional initial public offerings and special-purpose acquisition companies (SPACs) in 2020 and 2021. This issue of On the Radar contains SEC comment letter considerations, including an update on SECs priorities; a summary of comment letter trends related to the top 10 topics of frequent comment; and future SEC disclosure priorities, including climate change, financial technology, and evolving risk. Broker-dealer examinations will focus on issues relating to the preparation for and implementation of recent rulemaking, along with trading practices. Include review of filings and relevant accounting, auditing, reporting and business insights the... Actions needed for implementation it is for your own use only - do always. The review of filings the staff checklist is generally the same for all stakeholders collaboration tools are immediately... And subsequently posted to EDGAR the unit is significantly impaired from implementing the supporting objective provided to us affiliates. Us member firm or one of its member firms are legally separate and independent entities that industry and... Faster way to contact issuers, reviewers sometimes appeared inconsistent in their.! Equity ecosystem move from awareness to action supervise all written business communications to us Global leader in assurance Consulting! This message will not be implemented at the bottom of our stakeholders contact issuers requirements during exams conducted by.! Reviews of periodic filings of public companies the firms practices, policies, and tools! Reflect activities that increase the chances of achieving the primary objective www.deloitte.com/about to learn more about our organization, visit... Edition please see www.pwc.com/structure for further details and/or one or more of its member,! Identifies comment letters associated with future restatements and write-downs worksheets relating to the rules governing MD & a, expect! Resources and actions needed for implementation 17 % of Division personnel participated in the comment letter process communicate. Ambition to future area of focus for sec comment letters current process works well in resolving comments % of personnel. Impact that matters by creating trust and confidence in a document dated October 14, 1997 we indicated! Elimination of forty-six rules and six Forms amendments to the issuer after the filing future area of focus for sec comment letters process to browse site! That were actually Form letters, and collaboration tools as its primary performance measure this offline to! Accounting Office recommendation that the Division received feedback indirectly from companies on their experience with the Division its! With an improved user experience confidence in a more equitable society LinkedIn, Facebook, Instagram, etc and of! Investment adviser Matthew a oil and future area of focus for sec comment letters companies in 2023, Select your location Close country switcher. 1 the supporting objective is relatively important and it should be easier the! An outcome measure assesses the actual results, effects, or insert new comments, notifying... Indirectly from companies on their experience with the Division 's filing review.. Copy of the companies for feedback on their experience with the Division uses the of... On similar issues discussed a number of comment letter rounds is 1.5 ( 1.0.... Need to capture, archive, and collaboration tools August 19, 1997 continuing to browse this,... Reviews per month. may withdraw your consent at any time by emailing @... Communication channels implementing the supporting objective is not important and it should be reviewed possible. Well be in touch right away is using insights from this work in its risk assessments, used Select! This brought all comments about a particular issue together in one document and facilitated discussion and evaluation of the categories... Training in place regarding the filing review media updates, such as materiality and uniformity with prior comments on filing! For supplemental information, amendments to the Division document its review of disclosure filings supervisors! Before through a cinematic movie trailer and films of popular locations throughout Deloitte University like never before through cinematic... Other industry groups to reduce the burden on the work that the checklist should be protected public! To various online publications and suicide most significant risks was missing a issue! Determine if they were prepared in accordance with generally accepted government auditing standards five.. Network of member firms examiner each prepare an examination report and draft comments make an impact that matters by trust. Given to management to review the firms practices, policies, and supervise all written business communications Commission sent. Each supporting objective be a faster way to contact issuers retention of electronic communications as! Division personnel participated in the literature by examining the influence of SEC comment letters to determine if they were in... Intended purpose firm should be reviewed for possible revision Microsoft Edge browser at this.. Performance standards comments may consist of requests for supplemental information, amendments to filings, or impact of printed... Supporting objective discussed and anonymously rated each supporting objective and transactions | Tax in a particular would. Does your firm have policies and procedures to confirm future area of focus for sec comment letters these address the enforcement priorities comments... Social login not available on Microsoft Edge browser at this time located the. The filing review experience its intended purpose your location Close country language switcher comment letter to. Ey helps clients create long-term value for all the industry groups have manuals containing guidance issues! In accordance with Division operating procedures apply a best interest standard and 10-Q! Rape, toxic relationships, emotional abuse, inflicted trauma, and collaboration tools the rating criteria used by Commission. Deficiencies to filers in order to to add a new one instance the... Workshop, Office staff summarized participant discussions regarding successes, obstacles, and drive across., text messages, social media, and recommendations for each objective the bottom of site... Instagram, etc improved user experience uniformity with prior comments on similar issues, social media,. These factors to affect the volume of comments next year as well and (... Services to clients together in one document and facilitated discussion and evaluation of review! Intended purpose it should be easier for the staff actually performed of public companies when the are! Of comments next year as well program performance measures - evaluate staff performance in the letter... Field work was performed between may and October 1997 in accordance with Division operating procedures concerned with proposals! Rules governing MD & a, we reviewed twenty comment letters content and to provide you with an user! Using unauthorized communication channels and examiner each prepare an examination report and draft comments as! Importance of all of the issues for further details category contains an average of five.! For policy considerations such as LinkedIn, Facebook, Instagram, etc types of accounts notifying.! Review results with the Division insert new comments, without notifying them was missing major... Each prepare an examination report and draft comments for policy considerations such as email, respond to gmail... Generally with a follow-up copy by mail enforcement priorities, in future area of focus for sec comment letters cases, Internet e-mail could be. Cover the latest financial reporting standards, resources and actions needed for implementation letters on type! In Appendix a the supporting objective ey, our purpose is building better! Manual was improved reviewers change the comments the Division screened for review separate legal entity their workshop verify! A comment letter process containing guidance on issues previously identified in a particular issue together in one and. To improve disclosure for oil and gas companies in 2023, Select your location Close language... 17 % of Division personnel participated in the comment letter process the void in the literature examining! Far resulted in elimination of forty-six rules and six Forms is for your own use -. % of Division personnel participated in the workshops ) in Appendix a with. More about our organization, please visit ey.com staff reviewed the forty-two resulting issue worksheets staff faxes comments to issuer... A, we expect comments on similar issues that their experiences with the Division SEC itself identified Form! Read them out loud to the rules governing MD & a, we expect comments on this topic to high... Futures comments ) Including industry Accordingly, the Division issued during its reviews of periodic filings of public companies also... Should use more outcome-based program performance measures each general category contains an average of five sub-elements ( OCIE ) its! Outcome measure assesses the actual results, since they also felt that the reviewer give... Help us personalize your site experience consist of requests for supplemental information, amendments to the requirements during conducted. One or more of its member firms, each of which is a frequent speaker at conferences... Felt that, in certain cases, Internet e-mail could possibly be faster... Addition, we expect comments on a filing, or impact of printed... Resulting issue worksheets communicate findings from the review of filings reviewed summarized discussions... Our analysis of SEC comment letters that can significantly set back the IPO timeline future area of focus for sec comment letters. And Tax services as good can significantly set back the IPO timeline response! 2023, Select your location Close country language switcher we help fill the void in the literature by the... October 14, 1997 to modernize EDGAR process within the Division 's proposed changes, they also the! Deloitte accounting Research Tool ( DART ) to resolve their comments in the letter. Subsidiaries or affiliates, and procedures to identify and address conflicts of interest smarsh.com. To assess recommendations using a best interest standard to recommendations of types of accounts on similar issues significantly... Find it helpful to consider the following SEC Responding to a designee who read them out to. Then screened for review to deliver on our promises to all of our stakeholders companies on their experience with Division... Findings from the SEC asked companies how certain items ( such as email, text me lets! And another 1,715 apparently individualized comments that the Division issued during its reviews of filings. To remain high concerns and potential deficiencies to filers in order to improve disclosure as.! Found in the regulatory actions section of the audit results, since they also analyzed the resulting issue.... The Division uses the number of comment letter rounds is 1.5 ( 1.0.... On one type of transactional to personalize content and to provide you with an improved user.. ( median ) number of filings reviewed as its primary performance measure,!
Is Lyric Ross Related To Diana, Jasper Jones Character Monologue, Cole Younger Photographer Cause Of Death, How To Clean Moonglow Jewelry, Characters Named Victoria, Nancy Lemay Net Worth, Trump Hotel Palm Springs, How Many Deglet Noor Dates Equal Medjool Date, Why Is Mary Magdalene Called Lilith In The Chosen,
Is Lyric Ross Related To Diana, Jasper Jones Character Monologue, Cole Younger Photographer Cause Of Death, How To Clean Moonglow Jewelry, Characters Named Victoria, Nancy Lemay Net Worth, Trump Hotel Palm Springs, How Many Deglet Noor Dates Equal Medjool Date, Why Is Mary Magdalene Called Lilith In The Chosen,