May 18, 2016

Non-GAAP Measures: Corp Fin Issues 12 New & Revised CDIs

Yesterday, Corp Fin issued 12 new & revised CDIs. These new & revised CDIs are spread throughout this list of non-GAAP CDIs. About half of the 12 are new – and half are revised. The CDI dates are located at the bottom of each CDI. Tomorrow, I’ll blog a link to a blackline of the changes (I’m be in the air most of today.)

These CDIs should help provide guidance in the wake of the saber rattling that various members of the Staff – and Commission – have made in this area recently. I’ll be posting memos in our “Non-GAAP Measures” Practice Area

We have a webcast coming up in mid-July – “Non-GAAP Disclosures: What Is Permissible?” – featuring Brink Dickerson of Troutman Sanders; Chris Holmes of E&Y; Deb Kelley of Genesis; and Dave Lynn of and Morrison & Foerster…

PCAOB Re-Proposes Disclosure of “Critical Audit Matters”

Here’s an excerpt from this Cooley blog:

Last week, after five years of outreach, the PCAOB once again attempted to make the auditor’s report more relevant and informative to investors by re-proposing the auditor reporting standard, The Auditor’s Report on an Audit of Financial Statements When the Auditor Expresses an Unqualified Opinion, and related amendments.

Typically, as you know, auditors just give companies a pass/fail grade and provide no description of any issues or problems that occurred during the audit process; those problems are instead taken up with the audit committee. However, PCAOB Chair Jim Doty commented, “in today’s complex economy, and particularly in light of lessons learned after the financial crisis, investors want a better understanding of the judgments that go into an opinion – not a recitation of the standard procedures that apply to any audit, but the specific judgments that were most critical to the auditor in arriving at the opinion.”

While the reproposal would retain the standard pass/fail model, it would also provide for the inclusion in the auditor’s report of “critical audit matters” and new elements related to auditor independence and auditor tenure. According to the proposing release, the communication of critical audit matters “would inform investors and other financial statement users of matters arising from the audit that required especially challenging, subjective, or complex auditor judgment, and how the auditor responded to those matters.” Here is the press release and a fact sheet.

SEC Enforcement Chief Gives Update on Private Equity

In this blog, Steve Quinlivan covers this speech by Andrew Ceresney, Director of the SEC’s Division of Enforcement, about the SEC’s private equity enforcement initiative…

Broc Romanek