Topic: Audit Committee

SEC Proposes Revised Resource Extraction Rules, Again!

December 28, 2019 | Posted by Hillary H. Holmes; James J. Moloney Topic(s): Audit Committee; Miscellaneous; Securities Regulation

[Updated January 18, 2020]

On December 18, 2019, the Securities and Exchange Commission (the “SEC”) released proposed rules (available here) relating to the disclosure of payments by resource extraction issuers. The SEC’s release sets forth the tortured more-than-seven-year history of this rulemaking (see previous Gibson Dunn posts regarding this topic in 2015, 2013 and 2010). The SEC is proposing these rules by mandate pursuant to Section 1504 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) after having earlier adopted versions of the rules vacated in 2012 by the U.S. District Court for the District of Columbia, a ruling which the SEC declined to appeal, and disapproved in 2016 by Congress pursuant to its authority under the Congressional Review Act. While Congress disapproved of the adopted rules in 2016, it did not repeal Section 1504 of the Dodd-Frank Act, so the SEC’s rulemaking mandate remained in place. Revised rules cannot be substantially similar to the ones disapproved by Congress under the Congressional Review Act. As such, the newly proposed rules substantially differ from the previously adopted rules, and the differences are discussed in more detail below.

Desktop Calendar of SEC Deadlines for 2020 Now Available

August 21, 2019 | Posted by Hillary H. Holmes; Andrew L. Fabens; Peter Wardle; Stewart McDowell; James J. Moloney; Elizabeth A. Ising; Lori Zyskowski Topic(s): Audit Committee; Corporate Governance; Miscellaneous; Securities Regulation

This is a smart time of year to confirm plans for SEC reporting and capital markets transactions in 2020. To assist public companies in keeping track of the various filing deadlines, we have prepared a desktop reference calendar that sets forth filing deadlines for many SEC reports. To assist companies with planning capital markets transactions, including IPOs, our calendar also provides the staleness dates (i.e., the last date financial statements may be used in a prospectus or proxy statement without being updated).

SEC to Host Roundtable on Short-Termism on July 18

July 12, 2019 | Posted by Hillary H. Holmes; Brian J. Lane; James J. Moloney; Michael A. Titera Topic(s): Audit Committee; Corporate Governance; JOBS Act; Securities Regulation

The Securities and Exchange Commission has announced (available here) that it will hold a roundtable on July 18, 2019, to hear from investors, issuers and other market participants about short-termism’s impact on capital markets and whether the reporting system or other SEC regulations should be changed to address those concerns. The event will begin at 12:30 p.m. ET in the SEC’s headquarters and be open to the public in person and via live webcast on SEC.gov, as well as archived for later viewing. The agenda and access information are available here. The roundtable is related to a request for comment that the SEC published in December 2018, when the SEC announced it may be reconsidering quarterly reporting (our post about that SEC request for comment on quarterly reporting is available here).

SEC Proposes to Improve Disclosures Relating to Acquisitions and Dispositions of Businesses

May 7, 2019 | Posted by Hillary H. Holmes; Michael A. Titera; Andrew L. Fabens Topic(s): Audit Committee; Securities Regulation

On May 3, 2019, the Securities and Exchange Commission announced (available here) proposed changes to existing disclosure requirements in connection with acquisitions and dispositions of businesses. The proposed rules (available here) are intended to: (1) improve financial disclosures regarding the acquisition and disposition of businesses, (2) facilitate more timely access to capital, and (3) reduce the complexity and compliance costs related to such disclosures.

SEC Continues to Modernize and Simplify Disclosure Requirements

March 27, 2019 | Posted by Hillary H. Holmes; James J. Moloney; Michael A. Titera Topic(s): Audit Committee; Corporate Governance; JOBS Act; Securities Regulation

On March 20, 2019, the Securities and Exchange Commission (SEC) adopted amendments (available here) to modernize and simplify disclosure requirements for public companies, investment advisors, and investment companies (the Final Rules). The Final Rules form part of the SEC’s ongoing efforts to simplify disclosure requirements. The Final Rules are largely consistent with the proposed amendments outlined in the SEC’s October 11, 2017 proposing release (available here, and discussed in our client alert available here).

The PCAOB’s Draft Strategic Plan: Overview and Outlook

August 20, 2018 | Posted by Gibson, Dunn & Crutcher LLP Topic(s): Audit Committee; Securities Regulation

On August 10, 2018, the Public Company Accounting Oversight Board (PCAOB or Board) released a draft of its five-year strategic plan and sought public comment on the plan through September 10, 2018. This represents the first time that the Board has solicited public input to a draft strategic plan, and follows the Board’s announcement in April of a public survey to permit stakeholder input on the strategic plan even in advance of the draft’s release. In a speech on May 17, 2018, at the Deloitte/University of Kansas Auditing Symposium (Kansas Speech), PCAOB Chairman William D. Duhnke III announced that after the public comment period, the Board plans to finalize the strategic plan in November 2018.[1]

SEC Staff Provides Important Guidance for Disclosure and Accounting Implications of the Tax Cuts and Jobs Act- Practical Considerations for Reporting Companies

December 23, 2017 | Posted by Gibson, Dunn & Crutcher LLP Topic(s): Audit Committee; Securities Regulation

On December 22, 2017, the Securities and Exchange Commission’s Office of the Chief Accountant and Division of Corporation Finance (“Staff”) issued important guidance that provides significant relief and helpful answers on some of the accounting and disclosure issues raised by the comprehensive tax act, commonly called the Tax Cut and Jobs Act,^[1] that was signed into law on that same date (the “Tax Act”). The Staff’s guidance is contained in two pronouncements: (1) Staff Accounting Bulletin No. 118 (“SAB 118”), which essentially allows companies to take a reasonable period of time to assess, measure and record the effects of the Tax Act, and (2) Compliance and Disclosure Interpretation 110.02 (“CDI 110.02”) under Exchange Act Form 8-K, which confirms that the accounting implications of the Tax Act will generally not trigger impairment reporting under Form 8-K.

PCAOB Offers Guidance To Auditors Regarding Implementation of FASB’s Revenue Recognition Standard

October 25, 2017 | Posted by Michael Scanlon; Lori Zyskowski Topic(s): Audit Committee

The Public Company Accounting Oversight Board (the “PCAOB”) recently released Staff Audit Practice Alert No. 15 (the “Practice Alert”), titled “Matters Related to Auditing Revenue From Contracts With Customers.” The Practice Alert provides guidance for auditors related to the Financial Accounting Standards Board’s 2014 Accounting Standard Update titled “Revenue from Contracts with Customers” (Topic 606) (the “Revenue Recognition Standard”), which goes into effect for annual reporting periods beginning after December 15, 2017. The Practice Alert is available here, and the Revenue Recognition Standard is available here. While the Practice Alert is directed at auditors, it sheds light on what companies can expect from their independent auditors as companies prepare for and implement the new Revenue Recognition Standard. Given the importance of revenue as one of the most important measures that investors use to assess a company’s financial performance, we expect that there will be a keen focus on implementation of this standard by independent auditors.

SEC Requests Comments on New PCAOB Auditor Reporting Standard

July 28, 2017 | Posted by Michael Scanlon Topic(s): Audit Committee

On June 1, 2017, the PCAOB adopted a new auditor reporting standard—PCAOB Release No. 2017-001, The Auditor’s Report on an Audit of Financial Statements When the Auditor Expresses an Unqualified Opinion and Related Amendments to PCAOB Standards(the “Standard”)—that will be significant for public companies. A copy of our prior client alert on the Standard is here.

SEC Economist Comments on New Technologies Used by the Commission to Identify Risk, Detect Fraud and Enforce the Securities Laws

June 30, 2017 | Posted by Andrew L. Fabens; James J. Moloney Topic(s): Audit Committee; Corporate Governance; Securities Regulation

Last week Scott Bauguess, Acting Director and Acting Chief Economist of the Securities and Exchange Commission’s (SEC) Division of Economic Risk and Analysis, shared insights about how the SEC is leveraging artificial intelligence and machine learning to track, and perhaps predict, emerging risks in the marketplace.[1] In the latest in a series of speeches,[2] Bauguess also described how the SEC is using big data, harnessed with the appropriate processing power and partnered with human intuition, to focus investigative and enforcement resources. While Bauguess and others at the SEC see a bright future for data analytics at the SEC, particularly in identifying emerging trends, Bauguess stressed the human element is ever important in assessing risk, combatting fraud and bringing or recommending enforcement actions.