About SEC comments
At least once every three years, the SEC may review a public company’s financial reporting and disclosure practices in connection with the Division of Corporation Finance's filing review process.
First time registrants, including companies undertaking initial public offerings, as well as registrants with transactional filings for business combinations, other securities offerings and proxy solicitations, are subject to reviews that need to be cleared before initiating the transaction.
What impacts should companies consider?
- Unresolved filing review comments may restrict a company’s ability to access the public capital markets, execute M&A and other capital markets transactions and successfully support financial reporting and disclosure practices.
- A high volume of comments may require a significant amount of time and effort to resolve.
- SEC comments often illuminate disclosures that may conflict with rules or the applicable accounting standards or disclosures that may be deficient. Use SEC comments to help you carefully improve documentation of key accounting and reporting matters.
- SEC comment letters are publicly available, which means investors, competitors and other stakeholders have access to any issues raised in a company’s review process.
What should companies do?
- Stay informed about current areas of SEC focus, both for the company's industry and in general, so that management is better equipped to develop appropriate disclosures in new and emerging areas.
- Carefully manage interactions with the SEC staff, to ensure that the company has the credibility and confidence in the process to appropriately address questions about ongoing accounting and financial reporting.
- Review the publicly available SEC comment letters for other registrants in the company's peer group. These letters may reveal key themes and hot topics that companies can apply to their own ongoing reporting.
- Use knowledge of the SEC staff's current areas of focus to anticipate issues and ensure that the company develops contemporaneous documentation and disclosure that meets expectations for public company reporting.
- Budget enough time for responding to SEC staff comments, interacting with the SEC staff and resolving follow-up questions into project plans and timelines.
How PwC can help
PwC is a trusted resource for helping public companies navigate their accounting and financial reporting challenges. Our knowledge of the SEC review process puts you in a stronger position to develop financial reporting and disclosure practices. This support can help you develop strategies to withstand regulatory scrutiny, anticipate potential areas of SEC focus in future filings and meet constantly evolving expectations for clear and transparent financial reporting.