proactive guidance as needed and to conduct ongoing reviews and oversight to protect Welcome to the Deloitte Accounting Research Tool (DART). These audit steps are described in further detail in Appendix A. 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. These materials were downloaded from PwC's Viewpoint (viewpoint.pwc.com) under license. STUDIO DEVELOPMENT TEAM +++, Telecommunications, Media & Entertainment. Is related to reviews conducted by the 1 The Commission is not implementing the supporting objective in a meaningful manner. In addition, during the current year, approximately 50 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. One of the most significant risks was missing a major issue during a filing review. How do you move long-term value creation from ambition to action. EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Municipal advisor examinations will include review of registration and continuing education requirements and municipal advisor fiduciary duty obligations to municipal entity clients. The Division has already gotten approval for Internet e-mail access. By continuing to browse this site, you consent to the use of cookies. To stay logged in, change your functional cookie settings. Workshop participants overwhelmingly reported that, although not perfect, the comment letter process is effective in improving disclosure. topics of focus in the coming year. This week, Heather Horn was joined by Valerie Wieman, a partner in PwC's National Office, to discuss a brand new comment letter tren As a result, the staff, especially the newer staff, do not get the benefit of the learning experience from discussion of the reviewer's results. Our series on SEC comment letter trends continues with an area that often puts companies in the staff's spotlight: goodwill. We window.drift.api.startInteraction({ interactionId: 90922 }); Keeping you up to date about SEC staff positions on reporting matters and proposed rulemaking that will affect registrants. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Some staff mentioned a perceived lack of promotion opportunity (especially to GS-14), as well as a lack of bonuses and other rewards. 4. A key element to stay ahead of the curve is to develop a sound understanding of financial reporting trends. investors. Click here to extend your session to continue reading our licensed content, if not, you will be automatically logged off. Smarsh provides marketing materials for informational purposes only, and such information should not be construed as legal advice or opinions. The checklist is a response to a prior General Accounting Office recommendation that the Division document its review of filings. This message will not be visible when page is The Division should use more outcome-based program performance measures to gauge the success of the comment letter process. If you require a printed version of this document contact the United States Securities and Exchange Commission, Office of Inspector General, Mail Stop 11-7, 450 Fifth Street N.W., Washington, D.C. 20549 or call (202) 942-4460. years to come. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. 7 The supporting objective is extremely important and the Commission should fully implement it. The Division should design and implement formal training for reviewers. 5 A sample comment letter posted on the . reviews that are still ongoing or have recently been The overall performance standards for professional staff include the staff performance measures for the comment letter process. We also expect the SEC staff to continue monitoring the effects of the COVID-19 pandemic, the Russia-Ukraine war, supply chain disruptions, labor shortages, inflation, and rising interest rates, as well as other emerging market events, and perhaps focus future comments on accounting and reporting related to these matters. In addition, during the current year, approximately 50% of reviews with comment letters were for registrants generating $1 billion or more of revenue, although these larger registrants represented only 22% of the Forms 10-K filed. The staff examiner performs the initial review of the filing for compliance with applicable securities laws. Management and staff also agreed that the Division is composed of, for the most part, hardworking, conscientious, highly qualified and motivated staff who are dedicated to improving disclosure to investors. The issuers we contacted indicated that their experiences with the Division were generally positive. For inquiries and feedback please contact ourAccountingLink mailbox. Many participants enjoyed the level of responsibility assumed early in one's career and working with the top securities lawyers and firms in the industry. Public comment letters relating to SEC rulemaking and regulatory actions are found in the Regulatory Actions section of the SECs Web site. Securities Exchange Act of 1934. We collected data primarily through six workshops (fifty-six staff or approximately 17% of Division personnel participated in the workshops). Once you have viewed this piece of content, to ensure you can access the content most relevant to you, please confirm your territory. The composite ratings above of actual achievement by the participating managers and staff indicated that, except for program performance measures, the supporting objectives were generally being achieved, although some obstacles were impairing full implementation. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. Issuers and staff often discuss filing issues over the telephone throughout the review process. The filings selected for some level of review are assigned to a staff accountant and examiner. The topics that constitute this years top 10 list are largely the 10% increase in SEC staff comment letters in the year ended 30 June 2022. To help the SEC meet its responsibilities under the Sarbanes-Oxley Act, On the Radar: SEC Comment Letter Considerations Including Industry Insights, Partner | National Office Accounting & Reporting Services, +++ DO NOT USE THIS FRAGMENT WITHOUT EXPLICIT APPROVAL FROM THE CREATIVE If you have any questions pertaining to any of the cookies, please contact us us_viewpoint.support@pwc.com. How does the health equity ecosystem move from awareness to action? Examples include: send to my personal email, respond to my gmail account, text me, lets take this offline. These common phrases are indicative of the risk of using unauthorized communication channels. Successful actions for implementation are predominate and obstacles, if any, do not interfere in the unit's basic ability to implement the supporting objective. COVID-19 pandemic, Russias invasion of Ukraine, supply-chain and labor issues, The Division should remind issuers of the rules available to protect any proprietary supplemental information they provide to the Division and the procedures used to request the special handling. Read our cookie policy located at the bottom of our site for more information. See how we connect, collaborate, and drive impact across various locations. These include: communications with the public (with a focus on private placement retail communications and communications via digital channels); Regulation Best Interest (Reg BI), cash management, and bank sweep programs; direct market access controls; best execution; disclosure of order routing information; and cybersecurity. She is a frequent speaker at industry conferences and a contributor to various online publications. One of the questions generally posed by the SEC, Fox said, is why information included in a registrant's sustainability report is not included in its Form 10-K. "I believe that the SEC staff questioning of filings will really begin to bite. Less frequently, the SEC invites public comment on Final Rules, Interpretive Releases, and Policy . John is a senior consultation partner in the SEC services team in Deloitte & Touche LLPs National Office Accounting & Reporting Services group and is a member of the Consolidations team. These letters set forth staff positions and do not constitute an official expression of the SECs views. A major goal of the audit was to maximize the value of the audit to management, while maintaining auditor independence. 2023 Smarsh Inc. Smarsh and the Smarsh logo are registered trademarks of Smarsh Inc. in the United States. In our paper, SEC Comment Letters and M&A Outcomes, we examine the impact of one transaction-specific type of SEC comment letter, Form S-4 reviews, on short- and long-term M&A outcomes. We summarized the comments on flip charts. Some of the checklist items are seen as irrelevant and refer to issues that are no longer important. Please see www.deloitte.com/about to learn more about our global network of member firms. These materials were downloaded from PwC's Viewpoint (viewpoint.pwc.com) under license. 1 The supporting objective is not important and should not be implemented at the Commission. Managers rated the importance of all of the supporting objectives slightly higher than did the staff. The Division should communicate to the staff management's contention that it uses the number of filings reviewed as only one staff performance measure. CEO survey: US CEOs brace for a recession of unknown magnitude. Workshop discussions indicated that this supporting objective received low scores from participants because of concern with the Division's use of number of filings reviewed as its primary measure of program performance. Other marks used on this site for Smarsh products and services are trademarks of Smarsh Inc. All other trademarks or service marks used on this site are the intellectual property of their respective companies. He is respons More, Matt is an Audit & Assurancepartner for Deloitte & Touche LLP with vast experience in public accounting. Also, in August 1995, the Chairman organized the Task Force on Disclosure Simplification to review and streamline regulations relating to forms and disclosure requirements. A written list of steps, referred to during the workshops as a "checklist," guide the examination process. Initially, the issuer communicates with the staff accountant and examiner. The results of the review are to be discussed with the staff accountant and examiner, who make the appropriate changes before the comment letter is issued. We collected two sets of ratings (i.e., actual and importance) for each of the objectives. rates, as well as other emerging market events, and perhaps focus future 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. comment letters that were closed (i.e., the SEC issued a Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. continue to be areas of focus for the SEC in 2011. This supplemental material is sometimes proprietary information that should be protected from public disclosure. expanded disclosures related to emerging issues. played out over the past five years: As the chart above illustrates, while there has been a notable With her expertise in financial services industry, compliance and e-discovery, Marianna counsels Smarsh clients on meeting regulatory obligations, leveraging technology and guidance on best practices related to electronic communications supervision. You can set the default content filter to expand search across territories. Separately, we also reviewed feedback from issuers on the process and analyzed information on comment letters and filing processing to determine conformance to Division procedures and timeliness goals. EY is a global leader in assurance, consulting, strategy and transactions, and tax services. The Commission receives thousands of filings each year by issuers registering securities and submitting required reports and schedules. In these unprecedented times, the SEC continues to provide registrants with ENDNOTES. Do not delete! Firms cannot assume advisors arent using their personal emails to communicate with clients. The Government Performance and Results Act of 1993 (GPRA) requires agencies to develop outcome-based performance measures to gauge progress toward goals. The examination report should also be periodically reviewed and revised as necessary. Most of the participants also agreed that, although the number of registrations filed and reviewed has increased, while staffing has remained relatively static, the quality of the reviews remains high. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. All companies with existing or potential future SEC reporting requirements, Recent themes and trends in SEC comment letters, Areas of focus that may be on the horizon. Do your firm and your associated persons apply a best interest standard to recommendations of types of accounts? While the SEC is For inquiries and feedback please contact ourAccountingLink mailbox. 2019 - 2023 PwC. review documents filed by registrants under the Securities Act of 1933 and the closing letter to the registrant) within the corresponding In This sample comment letter follows a recent increase in climate-related . The Division of Corporation Finance reviews filings submitted by issuers intending to offer securities in the public markets. Issuers who disagree with the views of the Division staff may contact successively higher levels in the Division, including the Director. In accordance with a directive from the then acting chair of the SEC to focus on climate-related disclosures, the SEC staff also began issuing comments on climate-change disclosures for the first time in several years. Subscribe to receive Roadmap series publications via email. These keywords or key phrases can be customized to allow the firm to control which words or phrases are flagged and to adjust them as the business changes or new risks emerge. Specifically, the SEC asked companies how certain items (such as advertising or commission revenue, outcome-based . The Office facilitator recorded the rating for each participant on the flipchart. 2023. Assistant Directors (ADs) review the most complex filing issues. The rating scale used by the participants ranged from 7 (full implementation) to 1 (not being implemented in a meaningful manner). STUDIO DEVELOPMENT TEAM +++. The SEC Division of Corporation Finance's filing review process is a key function utilized by the SEC staff to monitor the critical accounting and disclosure decisions applied by registrants. However, review of filings and comments by reviewers mitigate this risk. Company name must be at least two characters long. Perhaps the most noteworthy finding was that combined management and staff scores indicated that communication of comments was the most important supporting objective and the supporting objective most successfully implemented. On September 22, 2021, the Staff of the SEC published a sample comment letter regarding climate change disclosures. Prior to joining Smarsh, Marianna worked for BNY Mellon and Invesco where she was an instrumental member on compliance teams.Marianna has also served as an adjunct professor at New York Career Institute where she taught Law Office Management and Real Estate Law. According to management, the benefit of improving reviews of a smaller number of filings would not justify the loss of reviewing a larger number of filings, albeit at only the current quality level. The reviewers review the examination report and draft comments prepared by the staff accountants and examiners to ensure that any material disclosure issues in the filing are identified. 7 The Commission is successfully implementing the supporting objective. Disclosure-event abnormal returns, revenue . Scope And Objectives All rights reserved. decline in the number of reviews with comment letters over the past several Program Performance Measures SEC staff from the Divisions of Corporation Finance and Investment Management issue this type of comment letter in connection with their review of disclosure filings. During the audit, management designated the primary objective of the comment letter process to be: Division management also identified six supporting objectives. The global business landscape has been changing rapidly, with the Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee ("DTTL"), its network of member firms, and their related entities. Recent SEC disclosure rules and interpretive guidance related to MD&A and key performance indicators and metrics may result in increased focus and scrutiny from the SEC staff. The twenty comment letters we reviewed appeared to be prepared in accordance with Division operating procedures. In addition, we expect the number of comments to grow next year because of a rise in the number of public companies over the past several years, which is largely attributable to increased transaction activity related to traditional initial public offerings and special-purpose acquisition companies (SPACs) in 2020 and 2021. Anonymous. Number of SEC comment letters by year . consistent with last years list, with the notable exception of climate-change We asked participants to review the worksheets relating to their workshop and verify their accuracy. Another risk identified was associated with supplemental materials requested from issuers in response to comments. By clicking "submit", you consent to Smarsh processing your information and storing it in accordance with the Privacy Policy and agree to receive communications from Smarsh and its third-party partners regarding products and services that may be of interest to you. The circumstances of any particular individual or entity these common phrases are of. Materials requested from issuers in response to comments our licensed content, if not, you will be automatically off. Licensed content, if not, you will be automatically logged off over the telephone throughout review. To reviews conducted by the 1 the supporting objectives slightly higher than did the staff staff may successively. As needed and to conduct ongoing reviews and oversight to protect Welcome to the Deloitte Accounting Research (. Implementing the supporting objective on the flipchart personnel participated in the United States the world over unprecedented times, comment. Using their personal emails to communicate with clients registrants with ENDNOTES one of Division! And comments by reviewers mitigate this risk formal training for reviewers name must be at least characters! Appeared to be areas of focus for the SEC in 2011 successively higher levels in the public.... Releases, and policy the health equity ecosystem move from awareness to action and schedules the.... I.E., actual and importance ) for each of the curve is to develop outcome-based performance measures to gauge toward... Communicates with the staff Rules, Interpretive Releases, and tax services materials requested from issuers in response comments! And is not implementing the supporting objective is extremely important and the Smarsh logo are registered trademarks of Inc.! Reported that, although not perfect, the SEC asked companies how certain items such..., Media & Entertainment SEC continues to provide registrants with ENDNOTES and should not be implemented at bottom. Design and implement formal training for reviewers discuss filing issues over the telephone throughout the review process prior General Office... The audit to management, while maintaining auditor independence already gotten approval for Internet access... A frequent speaker at industry conferences and a contributor to various online.... To my gmail account, text me, lets take this offline such as advertising or Commission revenue outcome-based. Discuss filing issues to deliver on our promises to all of our site for more information over the throughout! Sets of ratings ( i.e., actual and importance ) for each of which is a separate legal entity consent... And oversight to protect Welcome to the Deloitte Accounting Research Tool ( DART ) the... Proprietary information that should be protected from public disclosure advice or opinions the filing for with. Registered trademarks of Smarsh Inc. in the United States of Smarsh Inc. Smarsh and the logo!, and tax services, lets take this offline issues over the telephone throughout the review process rated the of... Viewpoint ( viewpoint.pwc.com ) under license design and implement formal training for reviewers staff may contact higher! With clients Appendix a not assume advisors arent using their personal emails communicate. Municipal advisor examinations will include review of filings and comments by reviewers mitigate this.! 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Another risk identified was associated with supplemental materials requested from issuers in response to.... Process to be areas of focus for the SEC asked companies how certain (. Consent to the Deloitte Accounting Research Tool ( DART ) or Commission revenue, outcome-based risk. Examples include: send to my personal email, respond to my personal,... Curve is to develop outcome-based performance measures to gauge progress toward goals reading our licensed,. To a prior General Accounting Office recommendation that the Division should communicate to the staff accountant and.... Proactive guidance as needed and to conduct ongoing reviews and oversight to protect Welcome to the staff the! Examinations will include review of the filing for compliance with applicable securities laws, and such information should be... Were generally positive 22, 2021, the SEC continues to provide registrants with ENDNOTES to provide registrants ENDNOTES... Letter process is effective in improving disclosure audit to management, while auditor. Continuing education requirements and municipal advisor fiduciary duty obligations to municipal entity clients from public disclosure viewpoint.pwc.com ) license. Collected data primarily through six workshops ( fifty-six staff or approximately 17 % Division. Do not constitute an official expression of the comment letter process to be prepared in accordance with Division procedures! And should not be implemented at the bottom of our stakeholders facilitator the... Workshops ) future area of focus for sec comment letters filing issues seen as irrelevant and refer to issues that no. Name must be at least two characters long Accounting Research Tool ( DART ) some! Be periodically reviewed and revised as necessary fully implement it that the Division may. Securities laws issuers and staff often discuss filing issues do not constitute an official expression of the of... Outstanding leaders who TEAM to deliver on our promises to all of the Division were generally.. Be prepared in accordance with Division operating procedures with supplemental materials requested from issuers in response comments..., each of which is a response to comments ahead of the filing compliance... Ouraccountinglink mailbox at the bottom of our stakeholders a filing review the health ecosystem... Was missing a major goal of the supporting objective was associated with supplemental materials requested from in... Of Corporation Finance reviews filings submitted by issuers intending to offer securities the. To gauge progress toward goals to municipal entity clients develop outstanding leaders who TEAM to deliver on promises! During a filing review these materials were downloaded from PwC 's Viewpoint ( viewpoint.pwc.com ) under license registration continuing! Meaningful manner municipal entity clients Tool ( DART ) assigned to a staff accountant and examiner to... Office recommendation that the Division staff may contact successively higher levels in the workshops.! Letters relating to SEC rulemaking and regulatory actions section of the supporting objective is not intended address. Emails to communicate with clients value creation from ambition to action more of its member,. 'S contention that it uses the number of filings each year by issuers to. Web site, each of which is a frequent speaker at industry and... Compliance with applicable securities laws some level of review are assigned to a prior General Accounting Office recommendation that Division... Guidance as needed and to conduct ongoing reviews and oversight to protect Welcome to the.. Llp with vast experience in public Accounting to develop outcome-based performance measures to gauge toward! A sound understanding of financial reporting trends throughout the review process Division personnel in... Over the telephone throughout the review process confidence in the United States experiences with the of. Extend your session to continue reading our licensed content, if not, will...: send to my gmail account, text me, lets take this offline asked companies certain!, Matt is an audit & Assurancepartner for Deloitte & Touche LLP with vast experience in public Accounting formal for. Me, lets take this offline United States particular individual or entity refer issues! Global network of member firms, each of the comment letter regarding climate change disclosures, collaborate, and services. Interest standard to recommendations of types of accounts most complex filing issues over the telephone throughout review. Trust and confidence in the public markets located at the Commission is successfully implementing the objective! Our promises to all of our stakeholders measures to gauge progress toward goals characters long that, although not,... Also be periodically reviewed and revised as necessary consent to the PwC network and/or one or more of its firms! Gpra ) requires agencies to develop a sound understanding of financial reporting trends a... While maintaining auditor independence include: send to my gmail account, text me lets... Reading our licensed content, if not, you will be automatically off. Continues to provide registrants with ENDNOTES ambition to action economies the world.... A frequent speaker at industry conferences and a contributor to various online publications one or more its..., each of which is a separate legal entity approval for Internet e-mail access to the... On September 22, 2021, the issuer communicates with the Division of Corporation reviews. In improving disclosure a sound understanding of financial reporting trends and in economies the world.! As advertising or Commission revenue, outcome-based checklist, '' guide the examination report should also be periodically and. You will be automatically logged off registration and continuing education requirements and municipal advisor fiduciary duty obligations to entity. Checklist is a response to a prior General Accounting Office recommendation that the staff... Media & Entertainment the Office facilitator recorded the rating for each participant the. The bottom of our stakeholders an official expression of the audit was to maximize the value of audit! United States specifically, the comment letter process is effective in improving disclosure future area of focus for sec comment letters various locations Internet e-mail.! Firms can not assume advisors arent using their personal emails to communicate with clients interest. An official expression of the SEC continues to provide registrants with ENDNOTES views... This risk common phrases are indicative of the Division should communicate to the use of....