Attend an Upcoming Class and Build the Foundational Knowledge and Practical Experience necessary to Prepare and Review the SEC’s Periodic and Current Reporting Forms.
https://www.pli.edu/Content/SEC_Reporting_Skills_Workshop_2018/_/N-1z10128Z4k?ID=320799
The complicated world of SEC reporting has now gotten even more complicated! Be sure you are prepared to comply with the recently enacted changes and have a plan in place to deal with the SEC staff “hot buttons”. Attend SECI’s live workshop SEC Reporting Skills Workshop 2017 being held May 16-17 in Dallas and May 24-25 in San Francisco with additional dates and locations listed on the SECI website.
http://www.pli.edu/Content/SEC_Reporting_Skills_Workshop_2017/_/N-1z10od0Z4k?ID=290558&t=FLY7_DPAD
By: George M. Wilson & Carol A. Stacey
As you may have heard, on April 3, 2017, the U.S. District Court for the District of Columbia entered final judgment in the on-going litigation over the Conflict Minerals Reporting Rule and remanded the case to the SEC.
This follows the action of the U.S. Court of Appeals for the District of Columbia Circuit, which in August of 2015 reaffirmed its prior holding that Section 13(p)(1) of the Securities Exchange Act and Rule 13p-1 “violate the First Amendment to the extent the statute and rule require regulated entities to report to the Commission and to state on their website that any of their products have ‘not been found to be “DRC conflict free”’. (Nat’l Ass’n of Mfrs., et al. v. SEC, No. 13-CF-000635 (D.D.C. Apr. 3, 2017))
Now that the decision has been remanded to the Commission, how this part of the statute and the related rule will be dealt with is uncertain. Since the requirement is part of the Dodd-Frank Act, the Commission is in a complex position. Even more uncertain is how companies should approach this part of the reporting process as they prepare to File Form SD by May 31 of this year.
To help companies deal with this situation the SEC has issued two Public Statements.
The first, a Public Statement by the Division of Corporation Finance, discusses how the SEC will approach the issue until further rule-making or other developments take place. CorpFin’s position is summarized in the following quote:
The court’s remand has now presented significant issues for the Commission to address. At the direction of the Acting Chairman, we have considered those issues. In light of the uncertainty regarding how the Commission will resolve those issues and related issues raised by commenters, the Division of Corporation Finance has determined that it will not recommend enforcement action to the Commission if companies, including those that are subject to paragraph (c) of Item 1.01 of Form SD, only file disclosure under the provisions of paragraphs (a) and (b) of Item 1.01 of Form SD. This statement is subject to any further action that may be taken by the Commission, expresses the Division’s position on enforcement action only, and does not express any legal conclusion on the rule.
In the Instructions to Form SD it is instruction (c) which requires “due diligence” if the “reasonable country of origin inquiry” determines that a company’s conflict minerals did or could have originated in the Democratic Republic of the Congo or one of the adjoining countries.
The second, a Public Statement by Acting Chairman Piwowar, discusses plans for future Commission action and expresses various thoughts about the cost and related enforcement aspects of the rule. In the Public Statement he says:
The Court of Appeals left open the question of whether this description is required by statute or, rather, is solely a product of the Commission’s rulemaking. The Commission will now be called upon to determine how to address the Court of Appeals decision – including whether Congress’s intent in Section 13(p)(1) can be achieved through a descriptor that avoids the constitutional defect identified by the court – and how that determination affects overall implementation of the Conflict Minerals rule.
I have accordingly instructed our staff to begin work on a recommendation for future Commission action. In preparing its recommendation, the staff will consider, among other things, the public comments received in response to the January 31, 2017 request for comment.
As always, your thoughts and comments are welcome!
By: George M. Wilson & Carol A. Stacey
When Congress passed the JOBS Act in 2012 they built it to last. When financial laws last a long time they frequently need a bit of periodic updating. With all credit to Congress and the drafters who designed the JOBS Act, they included provisions for the SEC to make periodic updates in the Act.
On April 5, the SEC made several updates, which include an increase in the revenue threshold to qualify as an Emerging Growth Company to $1,070,000,000, an increase from $1,000,000,000. You can read about all the other updates, most of which relate to Regulation Crowdfunding here.
As always, your thoughts and comments are welcome!
By: George M. Wilson & Carol A. Stacey
Now that year-end is over for most calendar-year companies the transition to the new revenue recognition standard is a major focus area. In recent weeks there have been two interesting sources of comment and information about this transition.
First, on March 21, 2017 Chief Accountant Wesley Bricker spoke before the Annual Life Sciences Accounting & Reporting Congress in Philadelphia. (If you are thinking “that sounds familiar”, it was at this same conference a year ago that former Chief Accountant Jim Schnurr made some serious comments about the use of non-GAAP measures that previewed the May C&DI’s!).
In his remarks, Mr. Bricker focused on the transition to the new revenue recognition standard, saying:
“Let me now turn to implementation of the new revenue standard. This area deserves close attention, both to make sure that the standard is implemented appropriately and timely and to ask whether the appropriate transition disclosures are being made so that investors and other market participants have sufficient time to absorb the anticipated effects of the new standard.
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In the worrisome column, however, some companies need to make significant progress this year in their implementations. In a survey of public companies released in October 2016, eight percent of respondents at that time had not started an initial assessment of the new revenue recognition standard, while an overwhelming majority of the others were still assessing the impact.
Particularly for companies where implementation is lagging, preparers, their audit committees and auditors should discuss the reasons why and provide informative disclosures to investors about the status so that investors can assess the implications of the information. Successful implementation requires companies to allocate sufficient resources and develop or engage appropriate financial reporting competencies.”
The second recent development is the release by Deloitte in a “Heads Up” newsletter in April 2017 of their most recent updated survey “Adopting the New Revenue Standard — Where Do Companies Stand?”
In the survey, Deloitte found that many companies that had originally contemplated using a full retrospective have moved more towards the modified retrospective method. And, along with the worries of the Chief Accountant above, they also found:
“Slightly more than half of respondents had started to implement the new standard, but most were in the very early phases of adoption.”
As always, your thoughts and comments are welcome!
By: George M. Wilson & Carol A. Stacey
As reported by Reuters, the Senate Banking Committee will vote next week, April 4, 2017, on Jay Clayton’s nomination to be Chairman of the SEC. The next step, not scheduled yet, would be a full Senate vote.
In the meantime, there is still plenty of excitement! Several democratic Senators have sent a letter to the SEC’s Inspector General asking the IG to review recent actions at the SEC. In one part of the letter the Senators say:
There is no evidence that any of these changes in the SEC’s course are desired, or have been sought, by the person nominated to be the next SEC Chair. At his confirmation hearing, SEC Chair-nominee Jay Clayton testified that he had not been consulted about Acting Chairman Piwowar’s change to enforcement policy, did not know enough to know whether it was appropriate to reopen the pay ratio rule, and had no specific plans to revisit any Dodd-Frank- mandated rules. Regardless of whether the SEC’s work on Acting Chairman Piwowar’s order results in a final action, agency staff will expend time and energy on these matters. As former Chair Mary Jo White has said, “[m]uch of [the SEC staff’s work] is behind the scenes, much of it out of the headlines. Should Mr. Clayton be confirmed, and should he disagree with the policy changes being pursued by Commissioner Piwowar, significant SEC staff work will have gone to waste.
Don’t you love the suspense…….
As always, your thoughts and comments are welcome!
The role of the audit committee is constantly changing. Recent regulations from the SEC and guidance from the PCAOB impact how audit committees, their advisors and those who prepare public company disclosures function. If you are a member of an audit committee, advise audit committees, or are responsible for corporate reporting on financial reporting and controls, you need to have the latest information and stay on top of current updates that occurred over the past year including SEC and PCAOB developments. Register today for PLI’s June 12th live program and webcast, Audit Committees and Financial Reporting being held in New York City.
Are you ready to implement the FASB/IASB New Revenue Recognition Standard? With approximately nine months to go – The countdown is on! SECI is conducting training workshops throughout the U.S. to prepare filers for the changes and arm them with the tools for implementation. Workshop leaders use interactive lecture, examples and case studies to impart solid knowledge of the provisions of the FASB’s and IASB’s new revenue recognition standard and build an understanding of how the new standard changes revenue recognition accounting and also how it affects the related estimates and judgements. Upcoming workshops include May 2-3 in New York City, May 22-23 in Chicago and June 21-22 in San Francisco with additional dates listed on the SECI site.
Everyone in the SEC Reporting community has been waiting for the new leadership at the Commission to be confirmed. As a bit of a preview, here is a link to C-Span video of Chair nominee Jay Clayton’s confirmation hearing. Enjoy!
By: George M. Wilson & Carol A. Stacey
Earlier in March the Enforcement Division announced a settled case against homebuilder Desarrolladora Homex S.A.B. de C.V. This company fraudulently inflated revenues by reporting the sale of over 100,000 homes that had never been built or sold! This was a huge fraud, over $3 billion!
All of that is interesting, but what is really fascinating is how the SEC found that the homes had never been built. They used satellite imagery! You can see one of the pictures here.
We are tempted to say “watch the skies”, but that sounds too much like a 50’s sci-fi movie trailer…..
As always, your thoughts and comments are welcome!