Jen: This is the PKF Texas Entrepreneurs Playbook. I’m Jen Lemanski and I’m back again with Chip Schweiger, one of our audit directors and a member of our PKF Texas SEC team. Chip, welcome back to the Playbook.

Chip: Thanks, Jen. Good to be back.

Jen: So I’ve heard a little bit in the news about FCPA. What is it and how does it affect public companies?

Chip: Sure so FCPA, also known as the Foreign Corrupt Practices Act, was actually a law that was enacted in 1977 and it generally prohibits the payment of bribes to foreign officials to gain business. It includes, not only the officers and the agents of that company, but also the company themselves.
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Jen: This is the PKF Texas Entrepreneur’s Playbook. I’m Jen Lemanski and I’m back once again with Ryan Istre, an Audit Director and one of the faces of our PKF Texas SEC team. Ryan, welcome back to The Playbook.

Ryan: Thanks, Jen.

Jen: Recently, one of our industry publications, Accounting Today, had an article where it said the PCAOB may fold into the SEC by 2022? What’s going on there?

Ryan: Yes, I did read that in Accounting Today. Right now, it’s a White House budget blueprint. The proposal is for, you know, for budgeting purposes, of course, to potentially save the country $580 million by the year 2030.
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Jen: This is the PKF Texas Entrepreneur’s Playbook, I’m Jen Lemanski and I’m here with Ryan Istre, an audit director and one of the faces of our PKF Texas SEC team. Ryan, welcome back to the Playbook.

Ryan: Thanks for having me Jen.

Jen: So, I’ve heard you guys on the audit side talk a little bit about CAMs, what are they and how do they affect public companies?

Ryan: So, a CAM is defined as a Critical Audit Matter. The PCAOB issued an amendment to AS 3101 which is the literature that governs what an auditor is required to include in an audit opinion of public companies. So the amendment actually adjusted what will be now seen in public company audit opinions.
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Jen: This is the PKF Texas Entrepreneur’s Playbook. I’m Jen Lemanski, and I’m here with Chip Schweiger, one of our audit Directors and one of the faces of the PKF Texas SEC team. Chip, welcome to the playbook.

Chip: Thanks, Jen. Good to be here.

Jen: So, I know this is the time of year where public companies are getting ready to file their financial statements, their disclosures… What do they need to look at with their Form 10-Ks when they’re getting ready to prepare those?

Chip: Yeah. So, Jen, last year we put out an analysis: comment letter trends from the SEC based on the last three years of comments. We saw some things on there that you would expect: the use of non-GAAP financial measures, comments on the management’s discussion and analysis and comments on fair value measurements, but there are also some new items on the list.

Jen: What kind of new items?


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As part of their Disclosure Effectiveness Initiative, the Securities and Exchange Commission (SEC) recently proposed interpretive guidance to eliminate some disclosures in Regulation S-K and to amend other requirements to better focus on material information in Item 303, “Management’s Discussion and Analysis.”

United States flag standing in front of a stone capitol building; image used for blog post about SEC proposal to change Regulation S-K

More specifically, the SEC’s proposal would eliminate duplicative disclosures and modernize “Management’s Discussion and Analysis of Financial Conditions and Results of Operations” (known as MD&A) to benefit investors and to simplify compliance for issuers. The proposed amendments are part of a comprehensive evaluation of the SEC’s disclosure requirements intended to improve the SEC’s overall disclosure regime. Specifically, the proposed amendments would eliminate Item 301 of Regulation S-K, “Selected Financial Data,” and Item 302 of Regulation S-K, “Supplementary Financial Information,” as the information is largely duplicative of other requirements.


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On January 30, 2020, Chairman of the Securities and Exchange Commission (SEC), Jay Clayton, released a public statement, “Proposed Amendments to Modernize and Enhance Financial Disclosures; Other Ongoing Disclosure Modernization Initiatives; Impact of the Coronavirus; Environmental and Climate-Related Disclosure.”

frontal view of a stone building with pillars and American flags; image used for blog post about SEC Chairman Public Statement

Clayton’s statement discusses these four topics:


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Jen: This is the PKF Texas Entrepreneur’s Playbook. I’m Jen Lemanski, and I’m here with Danielle Supkis Cheek, a director in our Entrepreneurial Advisory Services group. Danielle, welcome back to the Playbook.

Danielle: Thank you for having me again.

Jen: I know revenue recognition is a hot topic right now; we’re getting ready to go into audit season. What are some trends you are seeing where clients need to get ready since it’s kind of a new thing that they should be ready for?

Danielle: A lot of clients, particularly certain industry types, have a tendency to kind of not dismiss revenue recognition, but they don’t perceive it as large of an impact. There’s a lot of areas where the revenue recognition rules effectively didn’t change too much, but there’s some really specific nuances that did change, as well as the auditors are going to be looking at how did somebody assess to see if it changed or not. So even in industries that didn’t change very much, there is a certain amount of documentation that needs to be in place for the company having assessed it.


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Based on the number of SEC comment letters publicly published, the overall volume has been steadily decreasing for the last nine years. We looked at the most common issues raised in an SEC comment letter; the table below shows 10 of the top issues discussed in these letters over the past three years. It is important to note that, in many cases, more than one issue is mentioned.

numeric table listing common issues with SEC comment letters and the numbers of reviews with a comment on respective topic

The major topics in 2018 were similar to what we have seen in 2016 and 2017, with MD&A, the use of non-GAAP measures and fair value comments at the top of the list. There are, however, some new emerging trends SEC filers should consider:


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The Securities and Exchange Commission is extending the compliance date for the recently adopted amendments to Rule 606 of Regulation National Market System (“Regulation NMS”) under the Securities Exchange Act of 1934 (“Exchange Act”), which require additional disclosures by broker-dealers to customers concerning the handling of customer orders.

Business men and women meeting in background behind computer and data sheets.


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Jen: This is the PKF Texas Entrepreneur’s Playbook. I’m Jen Lemanski, and I’m back once again with Miriam Rouziek, one of our Audit Managers and one of the faces of PKF Texas’s SEC team. Miriam, welcome back to The Playbook.

Miriam: Thanks for having me, Jen.

Jen: In previous episodes we’ve talked a little bit about the PCAOB, which stands for Public Company Accounting Oversight Board, which I know was founded after the whole Enron thing. What changes do they have coming for 2019 – 2020?


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