SEC Rulemaking and Other Activities

Question 1

Which registrants will no longer qualify as accelerated filers under the SEC’s revised definitions?

Answer 1

Annual revenues of less than $100 million and public float between $75 and $700 million.

Question 2

What was the purpose of the Fixing America’s Surface Transportation (FAST) Act modernization and simplification of regulation S-K (Release No. 33-10618)?

Answer 2

Improve readability of disclosures and discourage repetition and disclosure of immaterial info

Question 3

FAST Act (Release No. 33-10618)

What were significant amendments to MD&A?

Answer 3

A discussion of the earliest of three years presented in the financial statements may be omitted from MD&A if the discussion is included in any of the registrants’ prior filings. If discussion of the earliest three years is not presented, the registrant should disclose the location in the prior filing where this discussion can be found. Additionally, the instructions to MD&A were revised to omit reference to year-to-year comparisons and allow registrants to use any presentation that enhances a reader’s understanding of the registrant’s financial condition and results.

Question 4

FAST Act (Release No. 33-10618)

What were significant amendments to confidential treatment requests?

Answer 4

Registrants may redact confidential information in material contracts and certain other exhibits without first submitting a confidential treatment request to SEC staff. This approach is permissible if the redacted information is both not material and would likely cause competitive harm to the registrant if publicly disclosed.

Question 5

FAST Act (Release No. 33-10618)

What were significant amendments to cross-referencing?

Answer 5

Information outside of the financial statements is prohibited from being cross referenced within the financial statements unless otherwise permitted or required by the SEC’s rules, US GAAP, or IFRS® Standards as issued by the International Accounting Standards Board (the Board) (as applicable). Registrants may cross-reference to information included in the financial statements within other sections of an SEC filing.

Question 6

FAST Act (Release No. 33-10618)

What were significant amendments to property disclosures?

Answer 6

Item 102 of Regulation S-K was revised to require a description of a property only if it is material to understanding the business of the registrant. The amendments do not apply to registrants in the real estate, mining, and oil and gas industries.

Question 7

FAST Act (Release No. 33-10618)

What were significant amendments to risk factors?

Answer 7

The instructions for risk factor disclosures were streamlined to remove specific risk factor examples (e.g., a registrant’s lack of an operating history or a registrant’s lack of profitable operations in recent periods, among others). Registrants are encouraged to focus on their own risk identification processes and provide risk disclosure that more precisely applies to their circumstances.

Question 8

FAST Act (Release No. 33-10618)

What were significant amendments to XBRL and use of hyperlinks?

Answer 8

All information that appears on the cover page of certain SEC forms will need to be tagged using Inline XBRL. Additionally, the final rule requires the use of hyperlinks for information that is incorporated by reference and available on the Electronic Data Gathering, Analysis, and Retrieval system, or EDGAR.

Question 9

Identify examples of and analyze what type of pro forma management adjustments would be appropriate given the new Article 11 requirements.

The amendments also include updates to

• expand the use of pro forma financial information to measure significance;
• clarify when historical financial statements and pro forma financial information are required within S-X Rule 3-05 and Article 11;
• make corresponding changes to the requirements for SRCs;
• permit the use of, or reconciliation to, IFRS Standards as issued by the Board in the financial statements of an acquired business in certain circumstances;
• define a significant subsidiary tailored to investment companies; and
• address financial reporting for fund acquisitions by business development companies and investment companies.

Answer 9

Management’s adjustments may include items such as
- Closing facilities
- Discontinuing product lines
- Terminating employees
- Executing new or modifying existing agreements, that are both reasonably estimable and have occurred or are reasonably expected to occur

Refer to https://www.sec.gov/rules/final/2020/33-10786.pdf