Last week, Broc blogged about the latest batch of Staff comments on revenue recognition under the new FASB standard. The folks at Audit Analytics have been pouring through companies’ SEC filings as well – and this recent blog says that there’s trouble brewing. Here’s the intro:
We have been asked several times whether or not the adoption of the new revenue recognition standard will cause an increase in the number of restatements and control failures. While it may be early to say, our review of SEC filings provides a strong indication that we will see an uptick in revenue recognition accounting failures.
Back in October, based on the analysis of Q2 filings, we found that some companies seemed to be struggling with the ASC 606 adoption. For most of the companies, the moment of truth came on December 15, 2017, the deadline to begin reporting with the new standard.
As we were working on the Q3 update, we identified a number of companies for which the controls were found to be ineffective and a material weakness was directly attributed to the lack of progress in the ASC 606 implementation.
The blog goes on to review specific disclosures by some companies that have encountered hiccups in the implementation process for the new standard.
Former SEC Chair: Securities Lawyers Need to be “Adults in the Room”
This Bloomberg article discusses former SEC Chair Mary Jo White’s comments at a recent conference. She spoke about some of the implications of the current deregulatory mood in DC – but also had some rather pointed comments about the role of lawyers in the current environment:
According to former Chair White, in a deregulatory environment, it is incumbent upon private sector lawyers to step up and be “the adults in the room.” She urged practitioners to focus on what is best in terms of disclosure and business, and not just on what is permissible. It is important to “step up the quality of lawyering” and advise as to what the optimal is, not just what the client can and cannot do.
These steps will reduce the risk of reputational loss to both client and counsel, she noted. She closed by suggesting that attorneys should follow the counsel of the late Archibald Cox, long-time law professor and Watergate special prosecutor, who urged lawyers to have the confidence to tell their clients that “’yes, the law lets you do that, but don’t do it—it’s a rotten thing to do.’”
March-April Issue: Deal Lawyers Print Newsletter
– Tax Reform’s Impact on Private Equity & M&A
– Delaware Supreme Court Reverses Controversial Dell Appraisal Ruling
– All Merger Side Letters Must Now Be Included in HSR Filings
– California Law Provides Private Company Dissolution Alternatives
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