All rights reserved. PwC refers to the US member firm or one of its subsidiaries or affiliates, and may sometimes refer to the PwC network. comment letters in the current year even though they represented only 31 percent Amendment requests indicate that the required improvements are viewed as material to an investor's decision. Asking the better questions that unlock new answers to the working world's most complex issues. To stay logged in, change your functional cookie settings. 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. Participants agreed that the Division uses the number of filings reviewed as its primary performance measure. Recent SEC disclosure rules and interpretive guidance related to MD&A and key performance indicators and metrics may result in increased focus and scrutiny from the SEC staff. Asking the better questions that unlock new answers to the working world's most complex issues. 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. By Jeremy Simons. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. CEO survey: US CEOs brace for a recession of unknown magnitude. All rights reserved. This includes retention of electronic communications such as email, text messages, instant messages, social media, and collaboration tools. referred to generally as filings). The printed document may contain agency comments, charts, photographs, appendices, footnotes and page numbers which may not be reproduced in this electronic version. IPO and uses that cash, the equity of the SPAC, or both to fund the 1 Division is conducting a study simultaneous with this audit in an effort to increase uniformity. 2021 edition of this publication because additional 2021 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. The Division has training for new staff examiners and accountants. Program performance measures are used to measure and evaluate the performance of the review of filings. 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. They demonstrated a high level of interest in the issues, knew when to push an issue and when not to, were articulate, and knew the technical literature. Communicate Staff Findings Some staff mentioned a perceived lack of promotion opportunity (especially to GS-14), as well as a lack of bonuses and other rewards. ttp://www.sec.gov/answers/commentletters.htm. 2023 Smarsh Inc. Smarsh and the Smarsh logo are registered trademarks of Smarsh Inc. in the United States. You can create keywords and key phrases to flag the risk of advisors using unauthorized communication channels. All rights reserved. DTTL (also referred to as "Deloitte Global") does not provide services to clients. Sharing your preferences is optional, but it will help us personalize your site experience. The training is presented by various Division senior staff and managers. 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. To send a message to . Broker-dealer examinations will focus on issues relating to the preparation for and implementation of recent rulemaking, along with trading practices. Background Resolve Comments 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. We asked participants for their opinions on the pluses and minuses of working for the Commission, specifically the Division. 1 The Commission is not implementing the supporting objective in a meaningful manner. Resolve Comments - Gain issuer acceptance of comments through implementing amendments and futures comments. However, issuers often do not request this protection. 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. If the firm elects to prohibit its use altogether, keeping employees from accessing non-member email platforms for business purposes, then there is a need to require employees to certify that they are acting in accordance with such policies and procedures on an annual or more frequent basis. 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. The premises for using this approach are common to many applications that use a team approach to decision making (e.g., teams can process more and more diverse information than an individual, employees are closer to the information needed than anyone else, staff can make a good system fail or vice versa, etc.). Members utilizing this blocking functionality should periodically conduct tests to ensure that it is functioning as designed or intended. Once you have viewed this piece of content, to ensure you can access the content most relevant to you, please confirm your territory. Importance. 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. More segment reporting comments in 2020. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. In each episode of our What's trending in SEC comments series, our guests bring you the latest themes in comment letters from the SEC's Division of Corporation Finance for the most common topical . 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. SEC Comment Letter Trends. Some of the checklist items are seen as irrelevant and refer to issues that are no longer important. To help the SEC meet its responsibilities under the Sarbanes-Oxley Act, 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. 2019 - 2023 PwC. The letters all request that . Deloittes Roadmap. Participants in the workshop discussed some of their concerns regarding the review process. Comments were received timely and they were able to resolve their comments in time to execute their transactions. The mean (median) number of comment letter rounds is 1.5 (1.0). If you have any questions pertaining to any of the cookies, please contact us us_viewpoint.support@pwc.com. Publication date: 30 Jun 2022. us SEC Comment Letter Trends. Heres how the numbers have 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. SEC Reporting, CFGI analyzed over 100 SEC comment letters made available by the SEC between April 1, 2013 and September 30, 2013. These audit steps are described in further detail in Appendix A. 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. Although issuers do not always agree with the Division's proposed changes, they generally still make them. Each success, obstacle, and recommendation was then coded and electronically transferred to a "resulting issue worksheet." 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. Participants rated communication of comments as the most important of the six supporting objectives. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com. They valued the experience of working in substantive areas of securities law. Sample Letter to Companies Regarding Climate 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). Office staff recorded all of the successes, obstacles, and recommendations ("comments") from the workshop participants on worksheets, and distributed them to the participants, who subsequently verified the worksheets. This departure from the traditional audit report comment process provided input at an earlier stage in the writing process. Click here to extend your session to continue reading our licensed content, if not, you will be automatically logged off. result in increased focus and scrutiny from the SEC staff. Archives are available on the Deloitte Accounting Research Tool website.The Roadmap series contains comprehensive, easy-to-understand accounting guides on selected topics of broad interest to the financial reporting community. consistent with last years list, with the notable exception of climate-change 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. Company name must be at least two characters long. inflation, and rising interest rates affecting markets worldwide over the past year. Securities Exchange Act of 1934. The checklist is a response to a prior General Accounting Office recommendation that the Division document its review of filings. 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. Yes, subscribe to the newsletter, and member firms of the PwC network can email me about products, services, insights, and events. We summarized the comments on flip charts. Municipal advisor examinations will include review of registration and continuing education requirements and municipal advisor fiduciary duty obligations to municipal entity clients. focus area of sec comment letters revenue recognition. These factors are crucial to an effective program. After reviewing the information we contacted five companies not on the Division's list for their feedback on the Division's comment letter process. Read our best practices here. In this webcast, KPMG professionals discuss recent themes and trends in comment letter activity from the SEC and what areas of focus may be on the horizon. The filings selected for some level of review are assigned to a staff accountant and examiner. KPMG webcasts and in-person events cover the latest financial reporting standards, resources and actions needed for implementation. Please see www.pwc.com/structure for further details. 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. Given the recent amendments to the rules governing MD&A, we expect comments on this topic to remain high. Below are highlights of the FINRA 2020 priorities: Communications via Digital Channels An emerging focus for FINRA is digital communications. 1 The supporting objective is not important and should not be implemented at the Commission. Stay logged in, change your functional cookie settings not request this protection, resources and needed! Rising interest rates affecting markets worldwide over the past year Limited, a UK Limited... 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