Category: Audit Committees and Independent Auditors

SEC Proposes to Revise the Accelerated and Large Accelerated Filer Definitions

The SEC proposed amendments that would revise the definitions of “accelerated filer” and “large accelerated filer.” These proposed revisions follow amendments adopted by the SEC on June 28, 2018, that expanded the smaller reporting company (SRC) definition and so brought some issuers under both the definitions of an accelerated filer and an SRC. As a result of last year’s amendments, some SRCs must have an...

SEC Fines ADT Inc. $100k for Non-GAAP Disclosure in Earnings Releases

On December 26, 2018, the SEC filed a cease-and-desist order and fined ADT Inc. (“ADT”) $100,000 for its use of non-GAAP financial measures without giving equal or greater prominence to the comparable GAAP financial measures. The order serves as a reminder of the importance of the SEC’s “equal or greater prominence” rule when disclosing non-GAAP financial measures, even when comparable GAAP financial measures are also...

Recent Developments in Auditor Tenure and Independence

Last month, over 35% of General Electric Co.’s shareholders voted against ratification of KPMG LLC as GE’s auditor. This high level of opposition (for some context, last year’s votes against KPMG were at a mere 5.7%) comes in the wake of GE’s recent accounting issues and criticism from proxy-advisory firms. More specifically, the SEC is currently investigating some of GE’s accounting practices, including its need...

Smaller Issuer Relief in the Financial CHOICE Act

As noted in the earlier post, the House passed the Financial CHOICE Act yesterday. While the headline-grabbing aspects of the Financial CHOICE Act relate to a repeal of the Volcker Rule and reducing the authority of the Consumer Financial Protection Bureau, there are some other interesting tidbits relating to public company disclosure, including two that would provide significant relief for smaller issuers. However, the Financial...

Disclosure Alert: Consider Transitional Disclosure on Revenue Recognition Standard

The staff of the Securities and Exchange Commission (SEC) continues to encourage companies to provide useful disclosure to investors with regard to the new revenue recognition standard that will apply for reporting periods beginning after December 15, 2017. The new standard not only changes the method for measuring revenue and the timing of revenue recognition, but also requires expanded disclosures to enable users of financial...