January 31, 2023
It’s Here! Corp Fin Updates the Financial Reporting Manual
The Corp Fin Staff published the latest update to the Division of Corporation Finance’s Financial Reporting Manual (affectionately known as the “FRM”), which is dated as of December 31, 2022. The FRM is the “go to” resource for so many things related to the presentation of financial statements and financial information, so it is always exciting to see the FRM get an extensive refresh.
The updated FRM has been revised to:
– Reflect amendments to Rules 3-10 and 3-16 and addition of new Rules 13-01 and 13-02 of Regulation S-X;
– Clarify the implementation date of ASU 2018-12, Financial Services – Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts for certain registration statements;
– Update the contact information for Corp Fin’s Office of Chief Accountant;
– Update the EGC revenue threshold based on the inflation-related adjustment announced in September 2022; and
– Remove certain outdated information, such as guidance on the adoption of ASC 606.
The Staff notes that this update does not include changes for the following rulemakings: Amendments to Financial Disclosures about Acquired and Disposed Businesses; Qualifications of Accountants; and Management’s Discussion and Analysis, Selected Financial Data, and Supplementary Financial Information. For questions related to these amendments, the Staff directs people to contact the individuals listed on the related rulemaking.
As the Staff notes in its disclaimer for the FRM, the manual was originally prepared by the Corp Fin Staff to serve as internal guidance, and in 2008, in an effort to increase transparency of informal Staff interpretations, Corp Fin posted a version of the FRM to its website. I can still remember carrying around my original hard copy FRM, which we always called the “Training Manual” back in the day. It was easily identifiable by the bright orange cover, which the PDF version retains to this day. The FRM includes critical interpretive nuggets and explanations that are always useful in your day-to-day practice.
– Dave Lynn