From this Cooley alert by Chad Mills: As a follow-up to Cydney Posner’s article from a few years back, please note that calendar-year public companies were required to adopt a new accounting standard on comprehensive income (ASU 2011-05, as amended by ASU 2011-12) in their 2012 first quarter Form 10-Q with retrospective application. As described below (and see also Corp Fin’s financial reporting manual (FRM) at Topic 13), if a company is filing a Form S-3 and had filed interim financial statements for a period that includes the date of adoption of a new accounting standard requiring retrospective application, Item 11(b)(ii) of Form S-3 normally requires the company to recast its prior period annual financial statements that are incorporated by reference to reflect the retrospective application (if material).
However, similar to the accommodation noted in Cydney’s article, in lieu of recasting the prior period annual financial statements, a company may (and assuming the company’s auditors agree) instead include a selected financial data table either included in or incorporated by reference in the Form S-3 containing certain information. Accordingly, if your clients are filing or post-effectively amending Forms S-3 this year, please take note of this and make sure to discuss with the client and its auditors. Note that in the case of a takedown from an already effective shelf S-3, a prospectus supplement is not subject to the Item 11(b)(ii) updating requirements; rather, companies would instead apply the “fundamental change” guidance in S-K 512(a) discussed in FRM Section 13110.2.
Below are a couple of recent S-3s with the selected financial data table reflecting the above:
For more background info, see this KPMG article at Part 3.
Study: A 11-Year Comparison of Restatements
In a recent study, Audit Analytics looked back over 11 years of restatements and, among other things, found that during the last three years, the quantity of total restatements appears to have leveled off, and the severity remained generally low, but hidden within the macro view of the data is the fact that restatements increased from companies trading on the NYSE and OTC.
Benchmarking Merger Agreements
– What is the problem that the SRS MAX product is solving?
– How does it work and what do the users of the product receive?
– Do you charge for this, and if so, how much?
Deal Cube Tournament: Round Two; First Match
Round Two begins! This will determine the Sweet 16. As noted in these rules (and keep sending more pics for the next tourney), please vote for two of the following four cubes below:
– Broc Romanek