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In this second post of our series discussing areas to consider as we navigate our way through the year-end reporting process, we are focusing on the latest news from the PCAOB concerning the inspection process. As the new PCAOB Board continues to implement their strategic plan (you can read more about the plan here), how they will guide the inspection process has been addressed in an “Inspections Outlook” document issued on…
As we move through the calendar towards year-end or quarter-end, we are presenting a series of posts focusing on issues to consider as we navigate through the reporting process. This first post is a reminder to make sure to update your Form 10-K or Form 10-Q for the SEC’s Disclosure Update and Simplification Rule. The major areas to update include: Form 10-K changes: Item 1 – Changes to S-K Item 101 Item 5 – Changes to…
The ASC 230 guidance for the statement of cash flows includes the following language in paragraph 230-10-45-25: In reporting cash flows from operating activities, entities are encouraged to report major classes of gross cash receipts and gross cash payments and their arithmetic sum—the net cash flow from operating activities (the direct method). (Paragraphs 230-10-55-1 through 55-4 and paragraph 230-10-55-21, respectively, discuss and illustrate a method by which those major classes of gross operating cash…
In our workshop discussions dealing with MD&A the disclosure of “known trends” is always a complex topic.  The idea of disclosing something that isn’t hurting your business currently but might hurt it in future periods is rarely easy to deal with.  Regulation S-K Item 303 makes this a requirement though if it meets a “reasonably likely” probability threshold: (3) Results of operations. **** (ii) Describe any known trends or uncertainties that have had or that the…
Thanks to a reader of the blog and a member of our SEC reporting community, here is a late change and an interesting difference between the originally published Final Rule for Disclosure Update and Simplification and the version that was published later which is conformed to the Federal Register version. In the originally published version of the final rule (which is no longer on the SEC’s webpage) the S-K Item 201(d) table was removed…
Over the last several weeks we have done a series of blog posts discussing changes from the SEC’s Disclosure Update and Simplification Final Rule on individual Form 10-K and 10-Q items. To help folks implement the changes we compiled what we think are all the relevant portions of the Final Rule together with our step-by-step review of the changes into this PDF document, which you can use as you update your reports.  This link…
Thanks to Gary Brown, Partner at  Nelson Mullins Riley & Scarborough LLP, who is also a workshop leader and speaker here at PLI, for finding the comment below and planting the seed for this post! Way back when, in the days before Sarbanes-Oxley (and yes, that really is way back when!), the SEC was concerned about the use of what was then called “pro-forma” information.  The term “pro-forma” was used to describe information that started…
The SEC’s required disclosure of the ratio of earnings to fixed charges has been a sometimes overly complex disclosure of questionable use.  And, as the SEC noted on page 57 of the Disclosure Simplification and Update Final Rule: “Other ratios that accomplish similar objectives include other variations of the ratio of earnings to fixed charges, the interest coverage ratio, and the debt-service coverage ratio, which can be calculated based on information readily available in…
Contingency disclosures have historically been specifically addressed in the SEC’s interim financial statement requirements.  Regulation S-X Article 10’s interim financial statement disclosure requirements included this language: (a) ***** (5) The interim financial information shall include disclosures either on the face of the financial statements or in accompanying footnotes sufficient so as to make the interim information presented not misleading. Registrants may presume that users of the interim financial information have read or have access to…
Way back in May of 2015 we postedabout the difference between documents that are furnished versus filed.  This important distinction came up in the post just before this onethat explores the impact of Disclosure Update and Simplification on the ARS.  So, to help us all recall what filed versus furnished is all about, here is a review. Filed versus furnished is essentially a legal distinction. It does not impact how information appears on the…