{"id":1346,"date":"2018-10-03T12:23:13","date_gmt":"2018-10-03T16:23:13","guid":{"rendered":"https:\/\/seci.wpenginepowered.com\/?p=1346"},"modified":"2018-10-03T12:23:13","modified_gmt":"2018-10-03T16:23:13","slug":"disclosure-update-and-simplification-the-details-continue-post-number-two-form-10-q-information-about-changes-in-shareholders-equity-and-some-help-from-the-sec","status":"publish","type":"post","link":"https:\/\/seciblog.pli.edu\/index.php\/disclosure-update-and-simplification-the-details-continue-post-number-two-form-10-q-information-about-changes-in-shareholders-equity-and-some-help-from-the-sec\/","title":{"rendered":"Disclosure Update and Simplification \u2013 The Details Continue! Post Number Two \u2013 Form 10-Q \u2013 Information About Changes in Shareholders\u2019 Equity and Some Help From the SEC"},"content":{"rendered":"<p>As we blogged on August 21 and September 17, the SEC\u2019s <a href=\"https:\/\/www.sec.gov\/rules\/final\/2018\/33-10532.pdf\">314-page Final Rule<\/a>dealing with \u201cDisclosure Update and Simplification\u201d makes a myriad of fairly detailed updates to Regulations S-X and S-K, as well as many of the Forms and other rules.<\/p>\n<p>These changes are effective 30 days after publication in the Federal Register.\u00a0 As of the date of this post, October 3, 2018, the final rule has not been published in the Federal Register.<\/p>\n<p>This means that these changes may or may not be in effect for the period ended September 30, 2018.\u00a0This would be true for both quarterly and annual periods.\u00a0 <strong>If your filing has a due date more than 30 days after publication the new rule would apply, so stay tuned!<\/strong><\/p>\n<p>In this post we will go into the details of the much-discussed new requirement to add information about changes in shareholder\u2019s equity to Form 10-Q.<\/p>\n<p><strong>In S-X Article 10<\/strong>, the source of the financial statement requirements in Form 10-Q, before this change, <strong>there was no requirement to provide information about changes in shareholder\u2019s<\/strong><strong>equity<\/strong>.\u00a0 Many companies voluntarily provided this information, but it was not actually required.<\/p>\n<p><strong>There was a requirement to include this information with annual financial statements<\/strong>.\u00a0 The source for this requirement was, and continues to be, Regulation S-X Rule 3-04, which after a minor update to include \u201ccomprehensive income\u201d is:<\/p>\n<ul>\n<li><strong>210.3-04 Changes in stockholders&#8217; equity and noncontrolling interests. <\/strong><\/li>\n<\/ul>\n<p style=\"padding-left: 60px;\">An analysis of the changes in each caption of stockholders&#8217; equity and noncontrolling interests presented in the balance sheets shall be given in a note or separate statement. This analysis shall be presented in the form of a reconciliation of the beginning balance to the ending balance for each period for which a statement of comprehensive income is required to be filed with all significant reconciling items described by appropriate captions with contributions from and distributions to owners shown separately. Also, state separately the adjustments to the balance at the beginning of the earliest period presented for items which were retroactively applied to periods prior to that period. <strong>With respect to any dividends, state the amount per share<\/strong>and in the aggregate for each class of shares. Provide a separate schedule in the notes to the financial statements that shows the effects of any changes in the registrant&#8217;s ownership interest in a subsidiary on the equity attributable to the registrant.<\/p>\n<p>In the Disclosure Update and Simplification Final Rule, the SEC made a subtle, almost sneaky change. \u00a0When updating and simplifying Regulation S-X, <strong>they added this short requirement to S-X Rule 10-01<\/strong>:<\/p>\n<p style=\"padding-left: 60px;\">(7) Provide the information required by \u00a7210.3-04 for the current and comparative year-to-date periods, with subtotals for each interim period.<\/p>\n<p><strong>And, with that addition, we now have to include changes in shareholder\u2019s equity information in Form 10-Q for the current quarter, the year to date and comparative prior year periods.\u00a0 The information can be in a separate statement or a note.\u00a0 As a side note, changes in non-controlling interest would be included also, just as they are in a full fiscal year presentation.<\/strong><\/p>\n<p>As a quick follow-up, the same requirement was added to S-X Article 8, the financial statement requirements for Smaller Reporting Companies, so <strong>SRC\u2019s will also have to provide this information.<\/strong><\/p>\n<p><strong>The timing of the change is up-in-the-air a bit because, as mentioned above, the final rule has not yet been published in the Federal Register.<\/strong>\u00a0 And, as is the case with such rules, it would be effective for filings made after the effective date, meaning a third-quarter-end Form 10-Q may or may not be after this date when we finally know the date!<\/p>\n<p>To reduce this confusion the staff issued a very helpful C&amp;DI on September 25, 2018.\u00a0 It says:<\/p>\n<p style=\"padding-left: 60px;\">Question 105.09<\/p>\n<p style=\"padding-left: 60px;\"><strong>Question:<\/strong>\u00a0On August 17, 2018, the SEC adopted amendments to certain disclosure requirements in Securities Act Release No. 33-10532, Disclosure Update and Simplification. The amendments will become effective 30 days after publication in the Federal Register. Among the amendments is the requirement to present the changes in shareholders\u2019 equity in the interim financial statements (either in a separate statement or footnote) in quarterly reports on Form 10-Q. Refer to Rules 8-03(a)(5) and 10-01(a)(7) of Regulation S-X. When are filers expected to comply with this new requirement?<\/p>\n<p style=\"padding-left: 60px;\">\n<p style=\"padding-left: 60px;\"><strong>Answer:<\/strong>\u00a0The amendments are effective for all filings made 30 days after publication in the Federal Register. In light of the anticipated timing of effectiveness of the amendments and expected proximity of effectiveness to the filing date for most filers\u2019 quarterly reports, the staff would not object if the filer\u2019s first presentation of the changes in shareholders\u2019 equity is included in its Form 10-Q for the quarter that begins after the effective date of the amendments. For example, assuming an effective date of October 25, a December 31 fiscal year-end filer could omit this disclosure from its September 30, 2018 Form 10-Q. Likewise, a June 30 fiscal year-end filer could omit this disclosure from its September 30, 2018 and December 31, 2018 Forms 10-Q; however, the staff would object if it did not provide the disclosures in its March 31, 2019 Form 10-Q. (Sept. 25, 2018)<\/p>\n<p>As always, your thoughts and comments are welcome!<\/p>\n","protected":false},"excerpt":{"rendered":"<p>As we blogged on August 21 and September 17, the SEC\u2019s 314-page Final Ruledealing with \u201cDisclosure Update and Simplification\u201d makes a myriad of fairly detailed updates to Regulations S-X and S-K, as well as many of the Forms and other rules. These changes are effective 30 days after publication in the Federal Register.\u00a0 As of &hellip; <a href=\"https:\/\/seciblog.pli.edu\/index.php\/disclosure-update-and-simplification-the-details-continue-post-number-two-form-10-q-information-about-changes-in-shareholders-equity-and-some-help-from-the-sec\/\" class=\"more-link\">Continue reading <span class=\"screen-reader-text\">Disclosure Update and Simplification \u2013 The Details Continue! Post Number Two \u2013 Form 10-Q \u2013 Information About Changes in Shareholders\u2019 Equity and Some Help From the SEC<\/span> <span class=\"meta-nav\">&rarr;<\/span><\/a><\/p>\n","protected":false},"author":9,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"_wpas_customize_per_network":false},"categories":[14],"tags":[],"coauthors":[154],"class_list":["post-1346","post","type-post","status-publish","format-standard","hentry","category-10-k10-q-tips"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"post_mailing_queue_ids":[],"_links":{"self":[{"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/posts\/1346","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/users\/9"}],"replies":[{"embeddable":true,"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/comments?post=1346"}],"version-history":[{"count":0,"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/posts\/1346\/revisions"}],"wp:attachment":[{"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/media?parent=1346"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/categories?post=1346"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/tags?post=1346"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/coauthors?post=1346"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}