{"id":2556,"date":"2023-05-17T10:45:21","date_gmt":"2023-05-17T14:45:21","guid":{"rendered":"https:\/\/seci.wpenginepowered.com\/?p=2556"},"modified":"2023-05-17T10:45:27","modified_gmt":"2023-05-17T14:45:27","slug":"three-tips-to-avoid-low-hanging-fruit-on-the-mda-sec-comment-tree","status":"publish","type":"post","link":"https:\/\/seciblog.pli.edu\/index.php\/three-tips-to-avoid-low-hanging-fruit-on-the-mda-sec-comment-tree\/","title":{"rendered":"Three Tips to Avoid Low-Hanging Fruit on the MD&amp;A SEC Comment Tree"},"content":{"rendered":"<p style=\"font-weight: 400;\">As we discussed in this <a href=\"https:\/\/seciblog.pli.edu\/are-you-behind-the-mda-update-curve\/\">blog post<\/a>, creating change in MD&amp;A is a complex process.\u00a0 The number of stakeholders involved in drafting and reviewing MD&amp;A creates logistical and tactical challenges.\u00a0 Old and obsolete beliefs that disclosure changes will attract negative attention from the SEC create resistance that is difficult to overcome.\u00a0 This is true even when the changes are to implement new requirements that will help companies avoid comments.<\/p>\n<p style=\"font-weight: 400;\">There are three areas of change from the SEC\u2019s 2020 MD&amp;A update that have become frequent comment areas, likely because companies have not changed their MD&amp;A to implement these rule changes:<\/p>\n<ul>\n<li style=\"list-style-type: none;\">\n<ul>\n<li>Critical accounting estimate disclosures<\/li>\n<li>Quantitative and qualitative disclosures about material changes<\/li>\n<li>Meaningfully addressing liquidity and capital resources<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p style=\"font-weight: 400;\">To help understand the issues in these disclosures, below are links to blog posts with example disclosures and related SEC comments.<\/p>\n<p style=\"font-weight: 400; padding-left: 40px;\"><a href=\"https:\/\/seciblog.pli.edu\/getting-ahead-of-the-mda-update-curve-critical-accounting-estimates\/\">This post<\/a> presents an example comment and company response for <strong>critical accounting estimate disclosures<\/strong>.\u00a0 While the example, particularly the revised disclosure, is lengthy, the lesson is simple.\u00a0 Critical accounting estimates are not the same thing as accounting policies.\u00a0 This is a simple comment to avoid.<\/p>\n<p style=\"font-weight: 400; padding-left: 40px;\"><a href=\"https:\/\/seciblog.pli.edu\/getting-ahead-of-the-mda-update-curve-quantitative-and-qualitative-disclosures-about-material-changes\/\">This post<\/a> presents an example comment and company response about providing <strong>quantitative and qualitative disclosures about material financial statement changes<\/strong>.\u00a0 The\u00a0<a href=\"https:\/\/www.ecfr.gov\/current\/title-17\/chapter-II\/part-229\/subpart-229.300\/section-229.303\">Regulation S-K Item 303\u00a0<\/a>guidance for this disclosure is very direct:<\/p>\n<p style=\"font-weight: 400; padding-left: 80px;\">\u201cWhere the financial statements reflect material changes from period-to-period in one or more line items, including where material changes within a line item offset one another, describe the underlying reasons for these material changes in quantitative and qualitative terms.\u201d<\/p>\n<p style=\"font-weight: 400; padding-left: 40px;\"><a href=\"https:\/\/seciblog.pli.edu\/getting-ahead-of-the-mda-update-curve-meaningfully-addressing-liquidity-and-capital-resources-disclosures\/\">This post<\/a> examines an example comment and company response focused on <strong>meaningfully addressing liquidity and capital resources disclosures<\/strong>.<\/p>\n<p style=\"font-weight: 400;\">Given the complexity and challenges in improving MD&amp;A, one strategy companies can adopt is to make incremental change as they work on quarterly reports during the year.\u00a0 This could help in working toward a reasonable implementation of these rule changes in their next year-end MD&amp;A.<\/p>\n<p style=\"font-weight: 400;\">As always, your thoughts and comments are welcome!<\/p>\n<p style=\"font-weight: 400;\">\n","protected":false},"excerpt":{"rendered":"<p>As we discussed in this blog post, creating change in MD&amp;A is a complex process.\u00a0 The number of stakeholders involved in drafting and reviewing MD&amp;A creates logistical and tactical challenges.\u00a0 Old and obsolete beliefs that disclosure changes will attract negative attention from the SEC create resistance that is difficult to overcome.\u00a0 This is true even &hellip; <a href=\"https:\/\/seciblog.pli.edu\/index.php\/three-tips-to-avoid-low-hanging-fruit-on-the-mda-sec-comment-tree\/\" class=\"more-link\">Continue reading <span class=\"screen-reader-text\">Three Tips to Avoid Low-Hanging Fruit on the MD&amp;A SEC Comment Tree<\/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":[14,242],"tags":[],"coauthors":[154],"class_list":["post-2556","post","type-post","status-publish","format-standard","hentry","category-10-k10-q-tips","category-reporting"],"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\/2556","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=2556"}],"version-history":[{"count":0,"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/posts\/2556\/revisions"}],"wp:attachment":[{"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/media?parent=2556"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/categories?post=2556"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/tags?post=2556"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/coauthors?post=2556"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}