17 The number of SEC comment . After reviewing this information, the Office contacted an additional five companies, not on the Division's list, for their feedback on the Division's comment letter process. Prior research on SEC comment letters has almost exclusively focused on reviews of periodic filings, such as 10-Ks. 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. Do your firm and your associated persons consider the express new elements of care, skill, and costs when making recommendations to retail customers? By Jeremy Simons. Please enable JavaScript to view the site. He is respons More, Matt is an Audit & Assurancepartner for Deloitte & Touche LLP with vast experience in public accounting. Audit Methodology In general, the mentoring program, where senior staff accountants and examiners provide guidance to more inexperienced staff, was well received, although the quality of the individual mentoring experience depended on the quality of the mentor. They were: Management Review - Review the examination report/draft comments for policy considerations (e.g., materiality, uniformity). They also felt that the training manual was improved. Broker-dealer examinations will focus on issues relating to the preparation for and implementation of recent rulemaking, along with trading practices. We also reviewed reports of registrations filed between October 1, 1996 and June 31, 1997 (1,228 registrations receiving full reviews and 567 registrations receiving a monitor for one or more specific items) to determine the timeliness of the initial filing review comments. 2021 edition of this publication because additional 2021 If you have any questions pertaining to any of the cookies, please contact us us_viewpoint.support@pwc.com. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Recent SEC disclosure rules and interpretive 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. Participants felt that the EDGAR (Electronic Data Gathering, Analysis, and Retrieval) system should be improved to make it more useful in filing reviews. Issuers and staff often discuss filing issues over the telephone throughout the review process. Smarsh is a registered trademark of Smarsh Inc. in the European Union. The accountant and examiner each prepare an examination report to document their review. Senior and middle managers and support offices such as Chief Counsel and Chief Accountant should participate in training. 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. 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. Now that FINRA and the SEC have released their 2020 priorities letters, we can take a closer look at what firms should prepare for this year. Copyright 2023 Deloitte Development LLC. 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. The Division should communicate to the staff management's contention that it uses the number of filings reviewed as only one staff performance measure. Thus, an employee would be able to access the Internet but not the email functionality. All rights reserved. These factors are crucial to an effective program. All rights reserved. However, issuers often do not request this protection. 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. Responding to a comment letter? This departure from the traditional audit report comment process provided input at an earlier stage in the writing process. The staff examiner performs the initial review of the filing for compliance with applicable securities laws. This content is copyright protected. Do Not Sell or Share My Personal Information. Our review indicated that the Division issued comments within its 30 day timeframe on approximately 88% of the 1933 Act filings in our sample receiving full reviews and approximately 98% of the 1933 Act filings receiving a monitor for one or more specific items. The printed document may contain agency comments, charts, photographs, appendices, footnotes and page numbers which may not be reproduced in this electronic version. Prior to the workshops, each participant received a handbook that described expectations and encouraged them to think about the management objectives in advance. referred to generally as filings). Performance obligations: Nature of performance obligations - Descriptions of your contracts discuss several activities. Certain services may not be available to attest clients under the rules and regulations of public accounting. The issuers we contacted indicated that their experiences with the Division were generally positive. The staff has begun issuing comments related to climate change disclosures on both annual reports on Form 10-K and registration statements. investors. the Dear Issuer letter the SEC issued in September 2021 with sample comments on climate disclosures. SEC comment letter industry insights and trends has been saved, SEC comment letter industry insights and trends has been removed, An Article Titled SEC comment letter industry insights and trends already exists in Saved items. complied with the existing interpretive guidance. 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. Read our best practices here. }); Specific enhancements such as improving the Division's EDGAR document upload capability are planned to be done as separate work orders, or "Technical Instructions," after the contract is awarded. Insights. attributable to increased transaction activity related to traditional initial ttp://www.sec.gov/answers/commentletters.htm. Anonymous. 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. After reviewing a filing, staff prepare an examination report summarizing the transaction and identifying any material disclosure issues. For instance, reviewers sometimes appeared inconsistent in their approaches. Bell entered into a consent judgment to settle a civil lawsuit brought by the Securities and Exchange Commission . Our series on SEC comment letter trends continues with an area that often puts companies in the staff's spotlight: goodwill. Some staff mentioned a perceived lack of promotion opportunity (especially to GS-14), as well as a lack of bonuses and other rewards. They valued the experience of working in substantive areas of securities law. Where possible, firms should block access to these email platforms through their networks. Audit Report, Appendix B - Effectiveness Rating Scales These outcomes of staff filing reviews were documented in "quantifiable benefits" memos. disclosures, (2) recently amended SEC rules related to the description of the We find that deals for which S-4s receive an SEC comment letter have a significantly higher completion rate, although the M&A process is significantly prolonged. Also, in August 1995, the Chairman organized the Task Force on Disclosure Simplification to review and streamline regulations relating to forms and disclosure requirements. 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. 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. 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. PwC. The regulators will continue to penalize firms and their employees for failing to meet regulatory requirements, including fines and other disciplinary actions. 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. You can set the default content filter to expand search across territories. However, some duplication of comments occurred in categories that included both accounting and legal issues, such as in the Management's Discussion and Analysis (MD&A) section of the filing. COVID-19 pandemic, Russias invasion of Ukraine, supply-chain and labor issues, The training is presented by various Division senior staff and managers. Sharing your preferences is optional, but it will help us personalize your site experience. Participants also gave us their ideas of the characteristics of outstanding staff. STUDIO DEVELOPMENT TEAM +++, Telecommunications, Media & Entertainment. Both managers' and staff's scores indicated that the program performance measure objective was generally not achieved. Sharing our expertise and perspective. The Division should use more outcome-based program performance measures to gauge the success of the comment letter process. "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 . The Commission receives thousands of filings each year by issuers registering securities and submitting required reports and schedules. Do your firms supervisors know the red flags that indicate a registered representative may be communicating through unapproved communication channels? 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. Dina Bass. Comments were received timely and the issuers were able to resolve their comments in time to execute their transactions. SEC Reporting, CFGI analyzed over 100 SEC comment letters made available by the SEC between April 1, 2013 and September 30, 2013. This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors. From time to time, the SEC invites comments from the public on Proposed Rules, Concept Releases, Self-Regulatory Organization filings, Public Company Accounting Oversight Board Rulemaking, Rulemaking Petitions, and Other Releases. 5 The supporting objective is relatively important and it should be generally implemented at the Commission. Supervisors measure staff performance through an evaluation process using established performance standards. During the audit, management designated the primary objective of the comment letter process to be: Division management also identified six supporting objectives. Please refer to your advisors for specific advice. Filing reviews were documented in `` quantifiable benefits '' memos to penalize firms and employees... Telecommunications, Media & Entertainment: //www.sec.gov/answers/commentletters.htm climate disclosures an earlier stage in the writing process purposes only and! 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