Tag Archives: form 10-k

Watch Out – Instructions to Form 10-K Typo’s?

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In all our workshops we always advise everyone to check the SEC’s webpage for the latest version of the instructions whenever it is 10-K or 10-Q time. And, recently, the SEC put updated instructions for Form 10-K on their webpage.

But this update has an interesting twist!

The updated instructions do not have any major changes. The only really new instructions relate to asset-backed issuers.

That said, there is something really strange about the new instructions. Check them out at:

www.sec.gov/about/forms/form10-k.pdf

Now, as you read them check out the cover page and as you look at the second line it says:

“For the fiscal yar ended”

While this looks like it might be a typo, we know the SEC is always VERY CAREFUL when they make these changes, and we think in all likelihood there has been some sort of a technical problem in the process of converting the instructions to PDF form and uploading them to the webpage.

So, how should we react? Should we literally follow these instructions? Include the likely technical issue errors?

Obviously NOT!

In fact, don’t forget what General Instruction C(1) says:

This form is not to be used as a blank form to be filled in, but only as a guide in the preparation of the report on paper meeting the requirements of Rule 12b-12. Except as provided in General Instruction G, the answers to the items shall be prepared in the manner specified in Rule 12b-13.

So, do it right!

As a last note, the 10-Q instructions have not been changed, but as we approach the First Quarter Form 10-Q, watch for updates!

As always, your thoughts and comments are welcome!

Tips for Your Form 10-K Review

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Welcome to the last half of March! For all of us with 90 day deadlines for our Form 10-K, it is getting close to time to file!

As you prepare for the final reviews of your Form 10-K we thought we would share a list of “Hot-Button Topics” to make sure they are addressed appropriately in your filing.

We developed this list while presenting on-site workshops with CPA firms, and think it may be valuable for all of us who are preparers too.

Here are the topics:

1. SAB 74 Disclosures (see Topic 11M in the codification at: http://www.sec.gov/interps/account/sabcode.htm) – make sure your SAB 74 Recent Accounting Pronouncement disclosure for new standards includes all four points from the SAB and addresses all material new standards for your company, including revenue recognition.

2. Cybersecurity – Most likely almost every company should have a risk factor for cybersecurity, but perhaps more disclosure is appropriate for your company. Be sure to check out Corp Fin Disclosure Topic 2 (at http://www.sec.gov/divisions/corpfin/guidance/cfguidance-topic2.htm).

3. Take time now to be sure that your webpage and such other public disclosures are consistent with 10-K, 10-Q etc. (E.g. segment discussions)

4. Segments are always a big deal. Check out the speech by OCA Deputy Chief Accountant Dan Murdock (at: http://www.sec.gov/News/Speech/Detail/Speech/1370543611034#.VQn1sGd0yUk). And, don’t’ forget the PACCAR enforcement action related in part related to segment disclosure (http://www.sec.gov/litigation/litreleases/2013/lr22711.htm).

5. Item 1 – S-K Item 101(a) – Big changes in “mode of conducting business”, even significant strategic changes, should be discussed.

6. Item 1 – S-K Item 101(c) – The description of the business must be by segment.

7. Review Item 1 discussion of distributions channels and methods etc. for consistency with Rev Rec Accounting.

8. Item 1A – For risk factors assure major risks from a manager’s perspective are included.

9. Item 2 – Relate to impairment risk and possible capex in future as applicable.

10. Item 3 – Not the same as the footnotes to f/S. More factual details, plaintiff suits etc.

11. MD&A – Quantification of changes is a major theme in SEC Comment Letters.

12. MD&A – Known trends – things that could make past not predictive of the future – No surprise stock drops!!

Hope all this helps, and if you have ideas for more topics, let us know!

Recent Happenings at the SEC

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For those who have had their heads buried in their 10-K process, this is a hit list of things that the SEC has been working on that you might have missed.

FRM Update

The CorpFin staff updated the Financial Reporting Manual in early January. The only changes made related to the FASB’s adoption of pushdown accounting and the SEC’s rescission of the Staff Accounting Bulletin on that topic. You can find the updated manual at: http://www.sec.gov/divisions/corpfin/cffinancialreportingmanual.shtml

New C&DI

The CorpFin staff added a new compliance and disclosure interpretation that addresses the use of graphics in SEC filings. See the C&DI at: http://www.sec.gov/divisions/corpfin/guidance/regs-tinterp.htm#118.01

Staff Review of Conflicting Shareholder Proposals

In light of the review of Exchange Act Rule 14a-8(i)(9) ordered by SEC Chair White, the CorpFin staff will express no views on shareholder proposals that directly conflict with a management proposal during the current proxy season. CD announcements at:

http://www.sec.gov/corpfin/announcement/cf-announcement—rule-14a-8i9-no-views.html#.VPC8Ryk0OJU and

http://www.sec.gov/corpfin/Article/corp-fin-staff-review-of-conflicting-shareholder-proposals.html#.VPC8lyk0OJU

Rule Proposal for Hedging Disclosure

In February, the SEC issued a rule proposal that would enhance corporate disclosure of company hedging policies for directors and employees, as mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act. The proposal would require disclosure about whether directors, officers and other employees are permitted to hedge or offset any decrease in the market value of equity securities granted by the company as compensation or held, directly or indirectly, by employees or directors.

You can find the rule proposal at: http://www.sec.gov/rules/proposed/2015/33-9723.pdf

Disclosure Effectiveness

As we discussed in our one hour briefing earlier this year, disclosure effectiveness is on the front burner of projects in CorpFin. What you may not have realized is that it is on the agenda of others at the SEC and outside the building. See for example: