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On Wednesday, March 9, the U.S. Securities and Exchange Commission (SEC) proposed a rule change that would require current and periodic reporting of material cybersecurity incidents. The rule would also require disclosures on what a company is doing to help address cybersecurity risks, such as any policies and procedures that have...
With each passing year it seems that investor-driven trends are driving the prominence of environmental, social, and governance (ESG) data. ESG disclosures play an increasingly important role in attracting new investors, but the upcoming formalization of ESG disclosures also heralds extra scrutiny from the Securities Exchange Commission (SEC), external auditors,...
In July 2021, the People’s Republic of China (“PRC”) announced the extension of recently introduced guidance impacting foreign companies operating in China. Ostensibly enacted to enforce stricter cybersecurity measures, the PRC’s expanded guidance now affects all companies engaging in capital raising activities outside of the Chinese market. Now, companies based...
On Thursday, April 12th, the Securities and Exchange Commission (“SEC”) published Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies (“SPACs”) and stated its views related to the accounting treatment of the private and public warrants in a SPAC. Based on the SEC staff statement,...
In today’s digital world there is hardly an organization that does not depend on data or technology for its continued success. This dependency makes cybersecurity more important today than ever before. For this reason, a successful cybersecurity program rooted in risk management is a key element for public companies that...
Three years after the Public Company Accounting Oversight Board’s (PCAOB) new auditing standard on the auditor’s reporting model became effective for large accelerated filers on December 15, 2017, auditors are now preparing to communicate critical audit matters (“CAMs”) for non-large accelerated filers. Communication of CAMs for audits of non-large accelerated...
While you are busy working on your filings, remember that the Securities and Exchange Commission (SEC) staff provided new guidance on COVID-19-related disclosures for companies like yours to consider. In June 2020, the staff in the Division of Corporation Finance (Corp Fin) of the SEC released “CF Disclosure Guidance Topic: COVID-19...
SEC Filing Review Process / Background The SEC Division of Corporation Finance selectively reviews public filings by SEC registrants to monitor and evaluate compliance with applicable disclosure and accounting requirements. Each reporting entity is reviewed, in some respect, at least once every three years. SEC reviews focus on critical disclosures...
As year-end approaches, calendar-year public companies are gearing up to prepare annual financial statements that will be included in their Form 10-K filings. Keeping up to date with the current reporting standards is essential for all filers. While some standards are widely covered because they have onerous requirements and apply to...
There are significant changes coming to the audit reports of most public business entities. The new auditor reporting standard adopted by the Public Company Accounting Oversight Board (“PCAOB”) in June 2017 will make the auditor's report more useful to users of financial statements by requiring additional disclosures about the audit....
On December 13, 2018, the Internal Revenue Service (the “IRS”) and the Treasury Department issued proposed regulations (the “Proposed Regulations”) on the Base Erosion and Anti-Abuse Tax (“BEAT”) under section 59A of the Internal Revenue Code. BEAT is a new minimum tax imposed on large corporations that make deductible payments...
How will the Financial Accounting Standards Board’s (FASB) new guidance, Accounting Standards Update (ASU) 2018-07, impact share-based payments to nonemployees? Your company will now benefit from a more cost effective and simplified approach to recognizing costs pertaining to nonemployee share-based compensation. This article will help you stay ahead of the curve...
The Financial Accounting Standards Board (“FASB”) recently announced an important Accounting Standards Update that affects all entities that issue equity-linked financial instruments with “down round” features. The Update simplifies the accounting for financial instruments with these features. What is a Down Round? A “down round” is a financing in which a company...
The change to the Financial Accounting Standards Board’s (FASB) definition of a business, made earlier this year in an Accounting Standards Update (ASU),* will likely lead to more acquisitions being accounted for as asset acquisitions rather than business combinations. This is significant, since the definition of a business affects many...
Should you be concerned with your “Going Concern” assessment? As a new accounting standards update takes effect, now is the time to ask that question. Background: U.S. auditing standards and federal securities law require an auditor to consider the possible financial statement effects of a company’s ability to continue as a going...
The Financial Accounting Standards Board’s (FASB) much anticipated standard on lease accounting (Leases – ASC 842) was finally issued on February 25, 2016. It’s now time to prepare to implement the new rules, which will take effect for public companies for fiscal years beginning after December 15, 2018. Although it...
This year may see a new definition for an old concept: Materiality. The parameters around what constitutes a material disclosure in financial statements will be impacted, and some onlookers say the new meaning will give more discretion to companies, which may lead to less information being provided. It was 1976 when...
Standards for revenue recognition, historically, have varied among industries. The FASB has undertaken the enormous task of simplifying the standards so all industries can follow the same guidance. Friedman LLP’s Robert Graham and Brian Kearns take a look at what the recent standards update will mean for businesses and how...
The Yates Memo: Individual Accountability for Corporate Wrongdoing
Companies involved in over-the-counter (“OTC”) exchange trading face a choice – which exchange do I pick? If your company is not trading on a major exchange like NASDAQ or NYSE, there are a few options at play in OTC trading, with some more popular than others.
Experiencing the loss or theft of protected personal data and then having to notify breach victims in the manner prescribed by law can be a costly and stressful experience for any organization. Fortunately, there are steps that can be taken to reduce the cost and contribute to the mitigation of the risks resulting from this type of cyber-attack.
In April 2015, the Financial Accounting Standards Board issued Accounting Standards Update 2015-03 for the stated purpose of simplifying the presentation of debt issuance costs. Updates to standards often bring about questions – how will this impact my business? How quickly can I get up-to-date?
Public companies are increasingly using social media outlets, such as Facebook, LinkedIn and Twitter, to make important announcements. But these relatively new communication channels raise questions about compliance with Regulation FD, the SEC's "fair disclosure" regulation.
On May 28, 2014, the Financial Accounting Standards Board ("FASB") issued its standard on revenue recognition, No. 2014-09, "Revenue from Contracts with Customers". The new standard will ultimately affect all industries, some more significantly than others, by establishing a single comprehensive model that will eventually exist in the FASB's Accounting Standard Codification Topic 606. The standard, among other things, is expected to remove inconsistencies in current revenue requirements, improve comparability across entities and industries and provide more useful information to users of financial statements.
The Financial Accounting Standards Board (FASB) is drafting an Accounting Standards Update (ASU) which would eliminate the concept of a development stage entity along with the special disclosures required for such entities under accounting principles generally accepted in the United States of America (U.S. GAAP). The final ASU is expected to be voted on by written ballot later this year.
Since the enactment of the Foreign Corrupt Practices Act in 1977, federal laws have required public companies to maintain sufficient "internal accounting controls." The Sarbanes-Oxley Act of 2002 (the "Act") further requires company management to annually assess and report on the effectiveness of internal control over financial reporting ("ICFR"). For larger registrants, the Act also requires independent auditors to attest to management's assessment of the effectiveness of the company's internal control.
The Center for Audit Quality (CAQ) kicked off the 2013 AICPA National Conference by indicating public company audits are stronger and the severity of restatements is trending downward.
The Committee of Sponsoring Organizations (COSO) is a joint initiative of five private sector organizations that is dedicated to improving organizational governance...
Litigation in the wake of corporate frauds is keeping the in pari delicto defense in the news - and its critics apoplectic.
Under accounting principles generally accepted in the United States of America (U.S. GAAP), financial statements are prepared under the presumption that the reporting entity will be able to continue as a going concern.
Section 1502 of the Dodd-Frank Act (the "Act"), passed by Congress in 2010, directed the SEC to issue rules requiring certain companies to disclose their use of so called "conflict minerals"...
With the amount of reliance that investors place upon the audited financial statements of publicly held companies, it is no surprise that regulators...
This article was originally published in the July 2013 issue of SEC Impact