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 back again with Ryan Istre, one of our audit directors and one of the faces of the PKF Texas SEC team. Ryan welcome back to the Playbook.

Ryan: Good to be here Jen.

Jen: So, audit independence issues are always a hot topic. What are you hearing from the SEC and PCAOB?

Ryan: So, you’re right, audit independence issues are always a hot topic and every auditor always has it on their mind 100% of the time while working with their audit clients. While the vast majority of firms have processes and controls in place to get it right, to make sure they are independent with respect to their audit clients, every once in a while, little nuances slip by.
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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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In response to the transparency issues around proxy advisory firms, the Securities and Exchange Commission (“SEC”) recently proposed new rules for proxy advisory firms. A proxy advisory firm helps institutional investors vote their shares at shareholder meetings. Because institutional investors have a wide variety of holdings, the specific risks and issues they must assess vary. The services proxy advisory firms provide include agenda assessment, research and recommendations on how to vote on shareholder proposals at publicly traded companies, and other offerings.

closeup shot of three men sitting at a wooden table by a glass window; image used for a blog post about the Securities Exchange Commission proposed rules for proxy advisory firms and shareholder voting

While more information can be a good thing, critics believe the additional information proxy advisory firms provide isn’t always conveyed with the best interests of Main Street investors in mind. So, if finalized, the SEC’s new rules would require proxy advisory firms to disclose more about their process and potential conflicts of interest and give companies the opportunity to make revisions before making final recommendations to clients. Specifically, the SEC’s proposals would revise the existing proxy advisory rules in three significant ways:


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Jen: This is the PKF Texas Entrepreneur’s Playbook. I’m Jen Lemanski, and I am back once again with Marty Lindle, one of our audit directors and one of the faces of PKF Texas’ Broker-Dealer team. Marty, welcome back to the Playbook.

Marty: It’s nice to be here.

Jen: So, we’ve talked a little bit about what’s in the eighth annual report. Now, is there anything new coming up on the horizon that’s not in there already?

Marty: Well, the SEC and Congress still haven’t issued the final rules for an inspection program, so we’re still in the interim program.


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