The checklist is a response to a prior General Accounting Office recommendation that the Division document its review of filings. Our Thinking. 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. The comparisons included analysis of management versus staff, actual achievement versus importance, and opportunities for improvement. 22 percent of the Forms 10-K filed. Sub-elements relating to the comment letter process are distributed throughout the six general categories. Participants indicated that improving these characteristics in the staff as a whole would also improve the comment letter process. customer complaints mentioning such communications? Broader SEC priorities often influence comment letter trends. Prior research on SEC comment letters has almost exclusively focused on reviews of periodic filings, such as 10-Ks. For more detail about the structure of the KPMG global organization please visithttps://home.kpmg/governance. Periodically test the systems to ensure the communications are being captured for review and retention. the SEC staff often issued comments on these topics to request expanded 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. 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. Overall Results The field work was performed between May and October 1997 in accordance with generally accepted government auditing standards. Please see www.pwc.com/structure for further details. 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. window.drift.api.startInteraction({ interactionId: 90922 }); Management Review - Review the examination report and draft comments for policy considerations (e.g., materiality, uniformity). Generally, this task is delegated to senior accountants and examiners. 2019 - 2023 PwC. To help the SEC meet its responsibilities under the Sarbanes-Oxley Act, Areas of focus include: (2) cybersecurity policies and procedures, (4) adherence to fiduciary duty, including adequacy of disclosures, and. Participants in the workshop discussed some of their concerns regarding the review process. The SEC began publicly releasing this correspondence in 2005 for filings made after August 1, 2004 that were reviewed by the SEC staff. This means firms need to capture, archive, and supervise all written business communications. Responding to a comment letter? Issuers who disagree with the views of the Division staff may contact successively higher levels in the Division, including the Director. Another risk identified was associated with supplemental materials requested from issuers in response to comments. Does your firm have policies and procedures in place regarding the filing, updating, and delivery of Form CRS. investors. 12-month period ended July 31. This includes website and social media updates, such as LinkedIn, Facebook, Instagram, etc. Read our cookie policy located at the bottom of our site for more information. Separately, we also reviewed feedback from issuers on the process and analyzed information on comment letters and filing processing to determine conformance to Division procedures and timeliness goals. DTTL (also referred to as "Deloitte Global") does not provide services to clients. You must consult an attorney for advice regarding your compliance with laws and regulations applicable to your business. Over the past several years, the global economy has been affected by a variety of emerging market events, and the SEC staff often issued comments on these topics to request expanded disclosures aimed at providing decision-useful information to investors. They generally rated training on new releases as good. In all instances, the Division confirmed that the appropriate actions had been taken during the filing reviews. years and may issue comments to such registrants. 1 The Commission is not implementing the supporting objective in a meaningful manner. 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. companies. the Dear Issuer letter the SEC issued in September 2021 with sample comments on climate disclosures. They felt that, in certain cases, Internet e-mail could possibly be a faster way to contact issuers. 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. 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. EY is a global leader in assurance, consulting, strategy and transactions, and tax services. They felt that segregating the accounting and legal comments in the comment letter would make it easier for the issuer to contact the originator of the comments. Quantitative Analysis The Division should ensure that the new EDGAR system includes improvements in document uploading capabilities and in identifying and tracking issuer's changes to filings, including in the financial statements. 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 Division communicates its comments to the issuer after the filing review to obtain appropriate improvements in disclosure. 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. Consider removing one of your current favorites in order to to add a new one. For more information about our organization, please visit ey.com. in the 2022 edition of this publication: Was derived from data provided by Audit For inquiries and feedback please contact ourAccountingLink mailbox. 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 . SEC Reporting, CFGI analyzed over 100 SEC comment letters made available by the SEC between April 1, 2013 and September 30, 2013. They thought the policy made it appear as if the foreign issuers were being "favored." The objectives selected for evaluation were those that management thought were both important and for which evaluation data would be useful. Dawn Taylor welcomes Dr. Pamela Larde . Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. It also highlights areas the SEC staff may . activated.+++ DO NOT USE THIS FRAGMENT WITHOUT EXPLICIT APPROVAL FROM THE CREATIVE
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. Participants rated communication of comments as the most important of the six supporting objectives. Program Performance Measures - Measure and evaluate the performance of the comment letter process accurately. 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 Division converted its standard examination reports, internal division memoranda, staff manuals, legal bulletins, current issues, industry guides, and disclosure regulations to electronic form. consistent with last years list, with the notable exception of climate-change If you have any questions pertaining to any of the cookies, please contact us us_viewpoint.support@pwc.com. However, adequate review coverage of issuer filings, given limited staff resources, is essential to the mission of the Division. We expect these factors to affect the volume of comments next year as well. The filings are received by the Commission, sent to the Division, and then screened for review. Smarsh handles information you submit to Smarsh in accordance with its Privacy Policy. Both managers' and staff's scores indicated that the program performance measure objective was generally not achieved. Our analysis of SEC comment letters identifies the frequency of topical areas addressed by the SEC staff and how their focus . 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. 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. This week, Heather Horn was joined by Valerie Wieman, a partner in PwC's National Office, to discuss a brand new comment letter tren The participants agreed that, taken as a whole, the Division's comment letter process was achieving its primary objective to improve disclosure to investors. 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. Recent SEC disclosure rules and interpretive Please see www.pwc.com/structure for further details. 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. Once you have viewed this piece of content, to ensure you can access the content most relevant to you, please confirm your territory. We There may be several rounds of letters from the SEC staff and responses from the filer until the issues identified in the review are resolved. Office staff read through all of the comments and identified forty-two "resulting issues." Municipal advisor examinations will include review of registration and continuing education requirements and municipal advisor fiduciary duty obligations to municipal entity clients. Do your firm and your registered representatives guard against excessive trading, irrespective of whether the broker-dealer or associated person controls the account? 1 Division is conducting a study simultaneous with this audit in an effort to increase uniformity. Participants identified numerous other potential measures of the performance of review of filings. By way of comparison, thirty-seven rules mandated by the Dodd-Frank Act and promulgated by the SEC before the end of 2014 received, on average, only . 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. Copyright 2023 Deloitte Development LLC. They also indicated that the quality of the reviews sometimes suffered in the push to achieve numerical goals. 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