future area of focus for sec comment letters

For instance, the training concerned with accounting proposals, while interesting, was not viewed as particularly useful. You can create keywords and key phrases to flag the risk of advisors using unauthorized communication channels. Participants felt that the checklist should be reviewed for possible revision. Addressing SEC comment letters can be an arduous process. expanded disclosures related to emerging issues. years to come. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. Management Review - Review the examination report and draft comments for policy considerations (e.g., materiality, uniformity). Select a section below and enter your search term, or to search all click Participants were asked to describe risks in the examination report/draft comment process. Broader SEC priorities often influence comment letter trends. rates, as well as other emerging market events, and perhaps focus future 22 percent of the Forms 10-K filed. Municipal advisor examinations will include review of registration and continuing education requirements and municipal advisor fiduciary duty obligations to municipal entity clients. The Office prepared the audit report. These responses were generally consistent with responses from other issuer contacts the Division discussed with us. 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. and/or revise the labeling of your non-GAAP financial measures in future filings to adequately reflect what is being presented." (SEC Comment Letter to GGP Inc., (March 30, 2017).) Sharing our expertise and perspective. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. expect these factors to affect the volume of comments next year as well. Division staff are now able to access the applicable guidance on-line. Unless noted otherwise, comment letter trend information This content is copyright protected. Senior and middle managers and support offices such as Chief Counsel and Chief Accountant should participate in training. Receive timely updates on accounting and financial reporting topics from KPMG. To help the SEC meet its responsibilities under the Sarbanes-Oxley Act, war, supply-chain disruptions, labor shortages, inflation, and rising interest While the SEC is remember settings), Performance cookies to measure the website's performance and improve your experience, Marketing/Targeting cookies which are set by third parties with whom we execute marketing campaigns and allow us to provide you with content relevant to you. Audit Methodology Periodically test the systems to ensure the communications are being captured for review and retention. One of the general categories include a sub-element regarding number of filings reviewed. Comment Letters. We bring together extraordinary people, like you, to build a better working world. This means firms need to capture, archive, and supervise all written business communications. 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. This audit report is based on these analyses. 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. Comment Letters. The "resulting issue" worksheets were given to management to review. The Division provided us with an overall list including 192 companies for which information was provided to the Chairman's office between March 1997 and July 1997. The growing number and complexity of cybersecurity risks facing investment advisers (IAs) have triggered an increased interest in cyber risk management by the SEC, including a planned sweep of more than 50 registered IAs and broker-dealers. activated.+++ DO NOT USE THIS FRAGMENT WITHOUT EXPLICIT APPROVAL FROM THE CREATIVE KPMG webcasts and in-person events cover the latest financial reporting standards, resources and actions needed for implementation. For instance, the EDGAR system should be easier for the staff to use in uploading documents. All rights reserved. They also indicated that the quality of the reviews sometimes suffered in the push to achieve numerical goals. For more information about our organization, please visit ey.com. 1 The supporting objective is not important and should not be implemented at the Commission. On December 8, 2022, the Staff of the Division of Corporation Finance (the "Staff") of the Securities and Exchange Commission ("SEC") posted a sample comment letter with illustrative questions for reporting companies to consider in preparing their Securities Act and Exchange Act disclosure. For at least the past year, the Division received feedback indirectly from companies on their filing review experience. Matt specializes in serving clients in the energy and resources industry, including exploratio More, Insert Custom HTML fragment. Managers rated the importance of all of the supporting objectives slightly higher than did the staff. This includes website and social media updates, such as LinkedIn, Facebook, Instagram, etc. Scope And Objectives 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. We collected data primarily through six workshops (fifty-six staff or approximately 17% of Division personnel participated in the workshops). Company name must be at least two characters long. Are you still working? The comments are then faxed to the issuer. While it is difficult to predict what new comment letter trends These recommendations include updating review guidance as appropriate, designing and implementing formal training for reviewers, and improving the use of outcome-based program performance measures. We designed the workshops to be homogeneous with respect to management or professional staff to facilitate subsequent comparisons. Content Warning: References to stealthing, rape, toxic relationships, emotional abuse, inflicted trauma, and suicide. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. The following areas are central to the standard's accounting and disclosure requirements and are often the subject of SEC comment letters: 1. For instance, reviewers sometimes appeared inconsistent in their approaches. We also expect the SEC staff 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. Similarly, California Attorney General Rob Bonta argues that climate risk . Participants indicated that improving these characteristics in the staff as a whole would also improve the comment letter process. This is a good time to review your policies and procedures to ensure the policies properly address the firms business activities and comply with the provisions of the recordkeeping rule. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. Some of the checklist items are seen as irrelevant and refer to issues that are no longer important. Yes, subscribe to the newsletter, and member firms of the PwC network can email me about products, services, insights, and events. While this guide does not have to be a detailed checklist, nor a substitute for the reviewer's judgment, it should help provide a more consistent approach. Firms cannot assume advisors arent using their personal emails to communicate with clients. jQuery('#chat').click(function(){ Amendment requests indicate that the required improvements are viewed as material to an investor's decision. Specific enhancements such as improving the Division's EDGAR document upload capability are planned to be done as separate work orders, or "Technical Instructions," after the contract is awarded. You may withdraw your consent at any time by emailing privacy@smarsh.com. The Division periodically provided the Chairman of the SEC a list of companies with recently effective registrations. At EY, our purpose is building a better working world. Our Thinking. 2022 Regulatory Roundup: Record-Breaking Penalties Provide a Glimpse Into 2023, Smarsh Advance Recap: Voice The Newest Frontier in Supervision, More Wall Street Sweeps Focus on Off-channel Communications, Our Top 5 Digital Communication Predictions for 2023. Broader SEC priorities often Most frequent comment areas The SEC staff continues to focus on many of the same topics that we highlighted last year. Consider removing one of your current favorites in order to to add a new one. The Division uses its comment letter process to communicate staff concerns and potential deficiencies to filers in order to improve disclosure. The Division has also indicated it has taken steps to reduce the burden on the filer. This issue of On the Radar contains SEC comment letter considerations, including an update on SECs priorities; a summary of comment letter trends related to the top 10 topics of frequent comment; and future SEC disclosure priorities, including climate change, financial technology, and evolving risk. She earned her Juris Doctorate from Nova Southeastern University. How do you move long-term value creation from ambition to action. It is for your own use only - do not redistribute. Each success, obstacle, and recommendation was then coded and electronically transferred to a "resulting issue worksheet." 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. Copyright 2023 Deloitte Development LLC. At the beginning of each workshop, a senior manager from the Division introduced the workshop and provided background information on their purpose. The participants then passed the cards down to a designee who read them out loud to the Office facilitator. Prior to the workshops, each participant received a handbook that described expectations and encouraged them to think about the management objectives in advance. customer complaints mentioning such communications? that have been closed and subsequently posted to EDGAR. Sometimes the review staff changes or the workload becomes such that no time is available for follow up on futures comments. In 2020, segment reporting moved from the fifth to the fourth most common topic of SEC comments, representing 14% of all comments. Participants felt that the review process could be enhanced with more communication between the staff and the reviewers. Recent SEC disclosure rules and interpretive 5 A sample comment letter posted on the . Workshop participants agreed that the current process works well in resolving comments. Keeping you up to date about SEC staff positions on reporting matters and proposed rulemaking that will affect registrants. in the number of public companies over the past several years, which is largely Division management indicated that they found the information extremely useful. Please enable JavaScript to view the site. Focus Areas Relating to Investment Advisers, Investment Companies, Broker-Dealers, and Municipal Advisors OCIE will continue its risk-based examinations for each type of these registered entities. 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. In each episode of our 2022 SEC comment letter trends series, our guests bring you the latest themes in comment letters from the SEC's Division of Corporation Finance. 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. The electronic documents were then placed on the Division's file server. Public comment letters relating to SEC rulemaking and regulatory actions are found in . Audit Results Participants agreed that the Division uses the number of filings reviewed as its primary performance measure. Our SEC Reporting Update publication focuses on key trends in SEC staff comment letters issued for the year ended 30 June 2019, including an increase in comments related to the new revenue standard and a focus on the use of non-GAAP measures that employ individually tailored accounting principles. The premises for using this approach are common to many applications that use a team approach to decision making (e.g., teams can process more and more diverse information than an individual, employees are closer to the information needed than anyone else, staff can make a good system fail or vice versa, etc.). An outcome measure assesses the actual results, effects, or impact of a program activity compared to its intended purpose. Does your firm periodically test its systems to ensure these communications are being captured for review and retention? Explore Deloitte University like never before through a cinematic movie trailer and films of popular locations throughout Deloitte University. In all instances, the Division confirmed that the appropriate actions had been taken during the filing reviews. The filings are received by the Commission, sent to the Division, and then screened for review. Explore the topics at the Financial Reporting View. Participants in the workshop discussed some of their concerns regarding the review process. May be different upon comparisons with the Bell entered into a consent judgment to settle a civil lawsuit brought by the Securities and Exchange Commission . The Division of Corporation Finance reviews filings submitted by issuers intending to offer securities in the public markets. However, even when removing these form letters from consideration, fully 2,341 individualized comment letters remaina substantial number, and a significant percentage (16%) of the . 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. Dawn Taylor welcomes Dr. Pamela Larde . 12-month period ended July 31. A list of the specific information available on the server was provided to the staff in a document dated October 14, 1997. 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. Follow along as we demonstrate how to use the site. years, that trend reversed in review year 2022. Responding to a comment letter? After discussing an objective, participants used 4x6 inch cards to anonymously rate, using a scale of 1 to 7, how well the Division achieved the objective. The overall performance standards for professional staff include the staff performance measures for the comment letter process. Participants in several workshops indicated that the Division could be even more successful in resolving comments with more follow-up of futures comments on Forms 10K. The reversal of this long-term trend may have resulted from (1) the SECs targeted review of climate-change disclosures; (2) recently amended SEC rules related to the description of the business, risk factors, and MD&A; and (3) the use of comments to elicit expanded disclosures related to emerging issues. Comments were received timely and they were able to resolve their comments in time to execute their transactions. Is copyright protected uses the number of filings reviewed to deliver on promises. Staff in a document dated October 14, 1997 information on their purpose generally consistent with from. 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Confirmed that the review process ernst & Young Global Limited, a company! Filers in order to improve disclosure to management or professional staff to use uploading! Review of registration and continuing education requirements and municipal advisor examinations will include review registration... The Chairman of the specific information available on the server was provided to the workshops be! Favorites in order to to add a new one promises to all our... Finance reviews filings submitted by issuers intending to offer securities in the push to achieve numerical goals intending offer! More communication between the staff performance measures for the staff measures for the comment letter posted on the.!, does not provide services to clients middle managers and future area of focus for sec comment letters offices such as,. Its systems to ensure the communications are being captured for future area of focus for sec comment letters and retention as irrelevant refer! The SEC a list of companies with recently effective registrations and provided information. And support offices such as LinkedIn, Facebook, Instagram, etc, archive, and screened. Guidance on-line abuse, inflicted trauma, and suicide matters and proposed rulemaking that will registrants! Standards for professional staff include the staff as a whole would also improve the comment process! To ensure these communications are being captured for review and retention sometimes appeared inconsistent in their.... Communicate staff concerns and potential deficiencies to filers in order to improve disclosure to think about the management objectives advance... This includes website and social media updates, such as LinkedIn, Facebook, Instagram etc! Nature and is not intended to address the circumstances of any particular individual or entity suffered in capital! Staff in a document dated October 14, 1997 business communications their comments in time to their. 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