SEC simplifies and updates disclosure requirements

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In brief , PwC US Aug 22, 2018

SEC amends its rules in order to simplify and update disclosure requirements.

What happened?

On August 17, 2018, the SEC amended its rules to eliminate, modify, or integrate into other SEC requirements certain disclosure rules. The amendments are part of the SEC’s overall project to improve disclosure effectiveness and are intended to simplify compliance without significantly altering the total mix of information provided to investors.

The amendments eliminate:

  • Redundant and duplicative requirements, which require substantially similar disclosures as GAAP, IFRS, or other SEC disclosure requirements;
  • Overlapping requirements, which are related to, but not the same as GAAP, IFRS, or other SEC disclosure requirements - including the elimination of the ratio of earnings to fixed charges;
  • Outdated requirements, which have become obsolete as a result of the passage of time or changes in the regulatory, business, or technological environment; and
  • Superseded requirements, which are inconsistent with recent legislation, more recently updated SEC disclosure requirements, or more recently updated GAAP.

In a limited number of situations, the amendments expanded the disclosure requirements. For example, an analysis of changes in stockholders’ equity will now be required for the current and comparative quarter and year-to-date interim periods.

The SEC also identified a number of disclosures that overlap with, but require information incremental to, GAAP. The SEC referred these items to the FASB to evaluate whether such incremental disclosures should be incorporated into GAAP.

Why is this important?

Some of the current SEC disclosure requirements have been eliminated, modified, or moved to a different location in the applicable SEC forms. Registrants will need to understand the impact the amendments have on their financial reporting.

In addition, smaller reporting companies are eligible for relief from some SEC disclosure requirements. If the disclosure requirements referred to the FASB are made part of GAAP, they will become applicable to smaller reporting companies in the same manner as any other public company. These requirements would similarly become applicable to private companies, unless specifically exempted by the FASB.

What's next?

The amended rules will become effective 30 days after publication in the Federal Register and can be applied to any filings after that date.

​The SEC has requested that the FASB determine within 18 months after the publication in the Federal Register whether the referred disclosure items should be added to its agenda of projects for potential standard setting. The SEC staff will also discuss applicable matters with the International Accounting Standards Board.

To have a deeper discussion contact:

Wayne Carnall

Partner, National Professional Services Group, PwC US


Ryan Spencer

Partner, National Professional Services Group, PwC US


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David Schmid

David Schmid

International Accounting Leader, National Professional Services Group, PwC US

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