February 7, 2014

Mandatory Auditor Rotation: PCAOB Gives Up The Ghost

When I blogged yesterday about the SEC approving the PCAOB’s budget, as noted in this piece, I forgot to mention the big news! In response to a question from a SEC Commissioner, PCAOB Chair Jim Doty stated that his pursuit of mandatory auditor rotation is dead. In comparison, as I blogged earlier, the European Union has approved new rules that mandate auditor rotation every 10 years…

Meanwhile, as noted in FEI’s blog, with last week’s announcement by the FAF that it has decided – after consulting with SEC Chair White – to contribute up to $3 million to the IFRS Foundation, could the SEC be planning a return to its IFRS Roadmap in the near future?

Kevin LaCroix gets excited – as he should! Number of public companies? Going up!

Corp Fin Updates Financial Reporting Manual (Again)

Yesterday, Corp Fin indicated that updated its Financial Reporting Manual for issues related to critical accounting estimate disclosures for share-based compensation in IPOs. Here’s a description from E&Y:

The SEC staff in the Division of Corporation Finance updated its Financial Reporting Manual to say that companies may be able to scale back their disclosures in management’s discussion and analysis (MD&A) relating to events and business developments that affected their estimates used to value stock-based compensation awards granted before the company’s initial public offering (often referred to as “cheap stock” disclosures). The revised guidance also states that, while the SEC staff will continue to issue comments to help it understand unusual valuations, the staff will not expect expanded disclosure in MD&A related to the underlying events and business developments that affected such valuations.

The updated FRM states that companies should continue to disclose all of the following:

– The methods used to determine the fair value of the company’s shares and the nature of material assumptions used in determining the fair value
– The extent to which such estimates are considered highly complex and subjective
– That such estimates will not be necessary for new awards once the shares begin trading

The new language in the FRM reflects the SEC staff’s focus on helping companies reduce disclosure overload.

More on “The Mentor Blog”

I continue to post new items daily on our blog – “The Mentor Blog” – for members. Members can sign up to get that blog pushed out to them via email whenever there is a new entry by simply inputting their email address on the left side of that blog. Here are some of the latest entries:

– Director Firings: War Stories
– Whistleblowers Can Now File Complaints Online With OSHA
– Non-Public Portions of Deloitte’s ’08 Inspection Report Released
– More on “Bylaw Amendment Could Deter Dissident Directors”
– SEC Enforcement: Talking the Talk, But Walking the Walk?

– Broc Romanek