February 7, 2023
Form 10-K: Does It Really Take 2,255 Hours?
Whenever the SEC issues a Form, it includes an “estimated average burden hours per response.” That’s because the Paperwork Reduction Act requires federal agencies – including the SEC – to estimate the compliance burden for any reporting or recordkeeping requirements. There’s always a section about this at the back of SEC proposals and adopting releases, although practitioners rarely comment on it. For the latest Form 10-K, the estimated burden is 2,255 hours!
Last week at the Northwestern Pritzker School of Law’s Securities Regulation Institute, there was a question about whether you could use this figure as a basis for estimating outside counsel fees. Scott Liamis of Salesforce explained why the answer is no:
1. The hours figure is intended to capture both internal & external hours, and isn’t limited to legal compliance (i.e., it also includes the compliance efforts of finance, treasury, auditors, etc.).
2. Although the Paperwork Reduction Act is a very important procedural requirement for SEC rulemaking, it’s difficult for companies to parse out the effort that goes into preparing a specific form – because it is just one component of a year-round integrated governance and disclosure process.
– Liz Dunshee