TheCorporateCounsel.net

May 12, 2011

Survey Results: Disclosure Controls and Disclosure Committees

We have posted the survey results regarding the latest disclosure controls and disclosure committee trends, repeated below (this new survey supplements the 2005 survey on disclosure committees):

1. Does your company have a formalized, written set of “Disclosure Controls & Procedures”?
– Yes – 66.7%
– No – 33.3%

2. Have your company’s Disclosure Controls & Procedures been formally updated and revised in the last year?
– Yes – 30.6%
– No formal changes, but there have been some informal changes during the last year – 27.8%
– No, there have been no changes in the last year – 41.7%

3. Does your company have a Disclosure Committee Charter?
– Yes – 58.3%
– No – 41.7%
– We don’t have a formal Disclosure Committee – 0%

4. If there is a formal Disclosure Committee, who is the chairman of the Disclosure Committee?
– General Counsel – 14.3%
– Securities Counsel – 5.7%
– CFO – 31.4%
– COO – 2.9%
– Controller – 25.7%
– Corporate Secretary – 0%
– Other – 20.0%

Please take our new “Quick Survey on Regulation FD Practices .”

5-Year Study: CFO and Auditor Departures Occurring Near Issuance of a Restatement

In their new study covering a five-year period, Audit Analytics reviewed both CFO and auditor changes and compared them to changes that occurred near the disclosure of a financial restatement. In the study, Audit Analytics considered a change to take place near a restatement if the change fell within the one-year time window beginning three months before and ending nine months after the disclosure of the restatement. The findings include:

– CFO Perspective: A review of CFO changes showed that the chance of a departure increased near the occurrence of a restatement, but the vast majority of the increase was attributable to CFO resignations, not dismissals. Therefore, CFOs that are required to restate financials do not appear to expose themselves to a considerable increase in the risk of dismissal.

– Auditor’s Perspective: Auditors, on the other hand, show an increase in both resignations and dismissals when a company discloses a restatement.

– Company’s Perspective: The loss of a CFO or auditor can be disruptive to a company. While approximately 24% of the general population tend to lose a CFO or auditor in a given year, about 37% of companies that file a restatement experience such a departure.

Mailed: March-April Issue of The Corporate Executive

The March-April Issue of The Corporate Executive includes pieces on:

– Dodd-Frank Update: Proposed Compensation Committee and Adviser Independence Rules
– Update on Restricted Stock and RSUs
– Correcting Social Security Withholding Errors
– Say-on-Pay: The Results So Far

Act Now: Get this issue rushed to you by trying a No-Risk Trial today.

– Broc Romanek