Covid-19 Disclosures – Not Just Speculation Anymore
Now that the market can review and dissect two quarters of Covid-related disclosures and reporting companies are gearing up for third-quarter reporting, Covid disclosures are no longer pure speculation. Following the two official guidelines released by the SEC (Disclosure Guidance Topic No. 9A which supplemented the previously issued Topic No. 9), a new CD&I issued on Covid-19 executive employment benefits, and numerous unofficial statements and speeches on the topic, the investment community and reporting companies are navigating the areas that require the most attention and thoughtful disclosure. Not surprisingly, the areas requiring the greatest consideration are management, discussion and analysis (including human capital disclosures and forecasting), risk factors, and internal controls over financial reporting.
Covid-19 “Benefits” – SEC Issues New C&DI
On September 21, 2020, the SEC issued a new compliance and disclosure interpretation (C&DI) related to the reporting of compensation perks or benefits. In particular, the SEC stated that:
In reporting compensation for periods affected by Covid-19,
Disclosures Related To COVID-19 – SEC Updates
Last week the SEC Office of the Chief Accountant (OCA) made a public statement on the importance of high-quality financial reporting for investors in light of Covid-19 on the same day that the Division of Corporation Finance issued an updated Disclosure Guidance Topic No. 9A on operations, liquidity, and capital resources disclosures related to the virus. Disclosure Guidance Topic No. 9A supplements the previously issued Topic No. 9 (see HERE) and follows the SEC’s virtual Investor Advisory Committee (“IAC”) meeting where investors testified as to additional information that should be relayed to the capital markets by public companies (see HERE).
OCA Statement on Financial Reporting
On April 3, 2020, the SEC Office of the Chief Accountant (OCA) made its first public statement on the importance of high-quality financial reporting for investors in light of Covid-19. At that time, many companies were in the process of preparing Q1 results and reports. Now that Q2 is coming to a
Disclosures Related To COVID-19
The SEC has been reiterating the need for robust disclosures related to the impact of COVID-19 on publicly reporting companies. In the last few weeks I have written about some of the guidance issued by the SEC including Disclosure Guidance Topic No. 9. Since that time the SEC has continued to issue guidance in the form of public statements. This blog will summarize the SEC guidance and statements on disclosures up to date, and include a sample risk factor for inclusion in SEC reports.
Public Statement by Chair Jay Clayton and Director of the Division of Corporation Finance, William Hinman
On April 8, 2020, SEC Chairman Jay Clayton and William Hinman, the Director of the Division of Corporation Finance, issued a joint public statement on the importance of disclosure during the COVID-19 crisis.
Before I get into summarizing the statement, my personal thought is that although there are many reasons why disclosure is important, including the basic premise that the
