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During the morning panel and the Corp Fin Workshop on day 1 of SEC Speaks, a number of Staff participants discussed 2024 priorities for the Disclosure Review Program. As always, note that all Staff comments are subject to the standard disclaimer that the views are the person’s own in their official capacity and not necessarily reflective of the views of the Commission, the Commissioners, or members of the Staff, and our summaries are based on our real-time notes.

Cicely LaMothe, Deputy Director of Disclosure Operations, highlighted these three high-level priorities for 2024:

– Incorporating new rulemaking into the Disclosure Review Program

• The Staff’s work doesn’t end with the adoption of a new rule — the Disclosure Review Program Staff gets up to speed, considers how disclosure documents are impacted and considers whether internal or external guidance needs to be updated and how to schedule reviews to make sure the team is covering appropriate filings. In the first year following effectiveness, the Staff tries to take a reasonable approach, recognizing that many companies are trying to make a good-faith effort to comply. In addition to confirming all requirements are met and you’ve carefully considered CDIs and other guidance, remember that most new rules have structured data requirements and if you incorrectly tag or fail to tag data, your disclosures are more likely to be more closely reviewed by the Disclosure Review Staff.

 

– Proactively addressing emerging issues

• The Staff is continually monitoring world events that impact reporting companies and their disclosures, and they consider whether developments could be material to segments of companies that they review — for example, the market disruptions in the banking industry in early 2023. Companies should be doing the same and revisiting and updating descriptions in risk factors and MD&A as the landscape changes.

 

– Strategically engaging with stakeholders in both the above areas

Corp Fin Director Erik Gerding gave some more granular insight on disclosure topics that remain or have become top of mind for the Disclosure Review Program Staff in 2024. Here’s a non-exclusive list:

– Areas that involve judgment or where FASB or IASB have recently issued accounting standards (e.g., segment reporting)
– Non-GAAP compliance
– Critical accounting estimates disclosures in MD&A
– Disclosures regarding supplier finance programs in notes to the financial statements and in MD&A
– Disclosures by China-based issuers
– Inflation disclosures, ensuring that disclosure addresses particularized risks and impacts specific to the company
– Interest rate and liquidity risk disclosures
– Emerging areas, including AI and exposure to commercial real estate market changes
– Newly-required disclosures, including clawbacks, SPACs and cybersecurity

– Meredith Ervine