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02/05/10-SEC Issues Interpretive Guidance on Climate Change Disclosures in Release No. 33-9106
As discussed in the article entitled "Interpretive Guidance on Climate Change Disclosures Is Issued in Release No. 33-9106" in the February 3, 2010, issue of Accounting & Compliance Alert, the SEC issued Release No. 33-9106, Commission Guidance Regarding Disclosure Related to Climate Change, on February 2.
Public companies are being advised to address any disclosure requirements related to climate change that may be triggered by lawsuits, business risks, lawsuits, regulation, or international treaties.
The disclosure obligations are outlined in Item 101, "Description of Business," Item 103, "Legal Proceedings," Item 503(c), "Risk Factors," and Item 303, "Management’s Discussion and Analysis," of Regulation S-K.
For example, under Item 101, a company would have to disclose any material capital costs on environmental controls, the SEC says. Item 503(c) might require disclosures about the risk a company faces from pending litigation related to environmental damage.
02/03/10-Proposed 2010 Budget Increase May Let SEC Add 200 Jobs
As discussed in the article entitled "Proposed 2010 Budget Increase May Let SEC Add 200 Jobs," in the February 2, 2010, issue of Accounting & Compliance Alert, President Obama proposed a $1.26 billion fiscal 2011 budget for the SEC on February 1, a 12% increase over the fiscal 2010 spending.
The extra funds "will do a great deal to help us keep pace with the continuing growth of the markets and provide necessary resources to support important regulatory initiatives in 2011," SEC Chairman Mary Schapiro said.
According to the SEC's Congressional Justification for fiscal 2011, which begins October 1, 2010, the personnel budget would increase to $646 million from $582 million. The extra money will let the SEC add jobs in enforcement, examinations, and in the new division of risk, strategy and financial innovation.
02/02/10-Senior SEC Officials Set to Appear at 2010 Reprise of SEC Speaks
As discussed in the article entitled "Senior Officials Set to Appear at 2010 Reprise of SEC Speaks," in the February 2, 2010, issue of Accounting & Compliance Alert, the Practising Law Institute's "The SEC Speaks in 2010," is scheduled for February 5-6 in Washington, and all five SEC commissioners and senior officials from the agency's divisions will discuss the key developments on the regulatory agenda.
Chairman Mary Schapiro is scheduled to give a keynote early on the first day after being introduced by Andrew Donohue, director of the division of investment management, and enforcement chief Robert Khuzami.
The agenda says financial reporting, disclosure, and accounting issues will be addressed by senior agency accountants, including:
- James Kroeker, the SEC’s chief accountant;
- Wayne Carnall, chief accountant of corporation finance;
- Richard Sennett, chief accountant for investment management; and
- Jason Flemmons, associate chief accountant in the enforcement division.
The scheduled commentators on accounting issues include former SEC commissioners Roel Campos, partner in charge of the law firm Cooley Godward Kronish’s Washington office; Edward Fleischman, senior counsel with Linklaters LLP; and Cynthia Glassman, a member of the board of directors of Navigant Consulting.
01/29/10 -- SEC Issues Plan to Amend Stock Buyback Safe Harbor
in Release No. 34-61414
As discussed in the article entitled "Plan to Amend Stock Buyback
Safe Harbor Issued in Release No. 34-61414," in the January 27, 2010,
issue of Accounting & Compliance Alert, the SEC recently released
a proposed revision of a stock buyback safe harbor in Release No. 34-61414,
Purchases of Certain Equity Securities by the Issuer and Others.
"The increased speed of today’s market activity, as evidenced
by flickering quotes, has made it increasingly difficult for issuers to
ensure that every purchase of its common stock during the day will meet
the requirements of the safe harbor in Rule 10b-18 of the Securities Exchange
Act of 1934," the SEC said in Release No. 34-61414.
The proposal will be out for comment until March 1.
Public companies have to make their share repurchases through one broker-dealer
per day and have to satisfy the price, volume, and timing restrictions
in Rule 10b-18 in order to qualify for the safe harbor. But the restrictions
haven't been updated in years and were written before the advent of common
techniques such as volume-weighted average pricing (VWAP).
01/27/10 -- SEC Issues Additional C&DIs to Address Expanded Proxy
Disclosure Requirements
As discussed in the article entitled "Additional C&DIs Are Issued
to Address Expanded Proxy Disclosure Requirements," in the January 25,
2010, issue of Accounting & Compliance Alert, the SEC's division
of corporation finance recently updated its compliance and disclosure
interpretations to explain some of the proxy disclosure rules that will
be in effect for the 2010 shareholder meeting season following the issuance
of Release No. 33-9089, Proxy Disclosure Enhancements.
Release No. 33-9089 requires public companies to increase the amount of information they provide on executive compensation policies and how they affect risk management. In addition, proxy statement summary compensation tables will have to include the fair value of stock and option grants under FASB ASC 718, Compensation—Stock Compensation, formerly SFAS No. 123(R).
The rule goes into effect February 28, 2010, in time for 2010 shareholder meetings.
The C&DIs address:
- How registrants should report the results of an annual meeting of shareholders on Form 10-K or Form 10-Q, if the meeting takes place before February 28, but the forms are due on or after that date; and
- How the February 28 effective date for the Regulation S-K amendments affects registration statements filed under the Securities Act of 1933 or Securities Exchange Act of 1934, for an issuer with a fiscal year ending on or after December 20, 2009.
01/26/10 -- SEC Issues Small Business Compliance Guide for Energy
Companies
As discussed in the article entitled "Small Business Compliance Guide
Issued for Energy Companies," in the January 25, 2010, issue of Accounting
& Compliance Alert, the SEC recently published a small business
compliance guide on its website to reflect the changes in Release No.
33-8995, Modernization of Oil and Gas Reporting.
The final rule was issued in December 2008 and became effective at the beginning of 2010. It amended the disclosure requirements in Regulation S-K, and Regulation S-X, and added Subpart 1200 to Regulation S-K to codify the revised disclosure requirements from Industry Guide 2, which was phased out.
The rule requires energy companies to price their proved oil and gas reserves with the average of the first-day-of-the-month price for each month for the 12 months prior to the end of the quarter or year.
The old disclosure requirements relied on the closing price from the last day of the fiscal year.
The rule also revised the definition of proved oil and gas reserves and amended Rule 4-10 of Regulation S-X.
01/21/10 -- SEC Seeks Public Comment on Equity Market Structure
in Concept Release No. 34-61358
As discussed in the article entitled "Commission Seeks Public Comment
on Equity Market Structure in Concept Release No. 34-61358," in the January
19, 2010, issue of Accounting & Compliance Alert, the SEC recently
issued Release No. 34-61358, Concept Release on Equity Market Structure.
The 74-page concept release asks for public comment about various market structure issues, including high frequency trading, order routing, market data linkages, and undisplayed, or "dark," liquidity. The commission plans to use the comments to help determine whether regulatory initiatives to improve the current equity market structure are needed, and the specific nature of such initiatives.
Comments on the release are due by April 21.
01/20/10 -- SEC Approves AS 7 and Conforming Amendment
As discussed in the article entitled "Commission Approves AS 7 and Conforming
Amendment," in the January 19, 2010, issue of Accounting & Compliance
Alert, the SEC recently approved the PCAOB’s Auditing Standard (AS)
7, Engagement Quality Review and Conforming Amendment.
AS 7 applies to all audit engagements and engagements to review interim financial information conducted under PCAOB standards.
The standard requires the reviewer to:
- Evaluate the significant judgments made and related conclusions reached by the engagement team in forming the overall conclusion on the engagement and in preparing the engagement report; and
- Perform procedures designed to focus the reviewer on the engagement team’s conclusions.
According to AS 7, if the reviewer is from within the firm, he or she must be a partner or the equivalent. The reviewer must also possess the accounting, auditing, and reporting skills sufficient to serve as the engagement partner.
AS 7 is effective for both the review of audits and of interim reviews for fiscal years beginning on or after December 15, 2009.
01/06/10 -- Financial Crisis Advisory Group Urges Continuing with
Convergence Effort
As discussed in the article entitled "Crisis Panel Urges Continuing with
Convergence Effort" in the January 5, 2010, issue of Accounting &
Compliance Alert, the leaders of the Financial Crisis Advisory Group
said that completing the process of converging global accounting standards
remains “critically important” despite the easing of the global crisis
that led to the group's formation.
The message was delivered in a January 4 letter the FCAG sent to the chairman of the Group of 20 nations, Prime Minister Chung Un-Chan of the Republic of Korea, which has just assumed leadership of the G-20 for the coming year.
Starting with a November 2008 summit in Washington and subsequent meetings in London and Pittsburgh, the G-20 has been urging the IASB to complete its work on the accounting for financial instruments in response to the financial crisis. The G-20 has also issued several statements pressing the FASB and IASB to continue working on international convergence.
"In order to develop high-quality standards that provide unbiased, transparent and relevant information, it is critical that the boards enjoy a high degree of independence from undue commercial and political pressures," wrote FCAG co-chairs Harvey Goldschmid and Hans Hoogervorst in the letter they signed on behalf of the other panel members.
01/05/10 -- In Release No. IA-2968, SEC Establishes Requirements
for Investment Advisors in Audits of Client Assets
As discussed in the article entitled "Release No. IA-2968 Establishes
Requirements for Investment Advisors in Audits of Client Assets" in the
January 4, 2010, issue of Accounting & Compliance Alert, the
SEC recently issued Release No. IA-2968, Custody of Funds or Securities
of Clients by Investment Advisers.
The release amends Rule 206(4)-2 of the Investment Advisers Act of 1940 by requiring registered investment advisers to be subject to surprise exams once a year by independent public accountants to verify client assets.
Release No. IA-2968 requires investment advisers to have qualified custodians maintaining client funds and securities send account statements directly to the advisory clients.
The rule amendment eliminates an alternative employed by advisers that permits them to send quarterly account statements to clients if they undergo annual surprise exams by an independent auditor. The SEC thinks that having custodians send statements directly to clients will provide more integrity to account statements.
The rule will become effective 60 days after its publication in the Federal Register, which normally occurs a few days after a rule has been posted on the SEC's website.
01/04/10 -- SEC Proposes to Extend Shelf-Registration Exemption to Underwriters
and Brokers in Release No. 33-9098
As discussed in the article entitled "Plan to Extend Shelf-Registration
Exemption to Underwriters and Brokers Offered in Release No. 33-9098"
in the December 23, 2009, issue of Accounting & Compliance Alert,
the SEC recently issued Release No. 33-9098, Revisions to Rule 163,
to propose expanding an exemption on communications with investors.
The proposal seeks to aid the process of capital formation by expanding an exemption under Rule 163 of the Securities Act of 1933, and permit underwriters and brokers working on the behalf of large-cap companies to talk to investors.
For a broker or underwriter to receive the exemption, the company has to meet the SEC's definition of well-known seasoned issuer, which generally means that the company has to have a market cap of $700 million or $1 billion in securities other than common stock and is current with its regulatory filings. Shell companies and limited partnerships don't qualify for the WKSI classification under the ineligible issuer definition of Rule 405 of the 1933 Act.
Comments on the proposal are due January 27, 2010.
12/28/09 -- SEC Expands Proxy Disclosures on Executive Compensation,
Risk Management in Release No. 33-9089
As discussed in the article entitled "Proxy Disclosures on Executive Compensation,
Risk Management Are Expanded in Release No. 33-9089" in the December 24,
2009, issue of Accounting & Compliance Alert, the SEC issued
Release No. 33-9089, Proxy Disclosure Enhancements, just hours
after the commissioners approved the changes at a public meeting.
The SEC said it scaled back some of the changes from the proposed version of the rule, Release No. 33-9052, so that the amendments could be put in place for proxy season, but it hopes to address some of the other topics, such as adding to the number of executives for which compensation has to be disclosed and ending an exemption that permitted some companies not to reveal their performance target data, in upcoming proposals.
The changes that were implemented include increasing the amount of information companies will have to provide about the board's role in risk management and director qualifications.
The summary compensation table and director compensation table as described in Item 402 of Regulation S-K will have to provide the aggregate grant date fair value of stock and options awarded during the year according to FASB ASC 718, Compensation—Stock Compensation, formerly SFAS No. 123(R).
12/21/09 -- SEC Expands Proxy Disclosures on Executive Compensation,
Risk Management in Release No. 33-9089
As discussed in the article entitled "Proxy Disclosures on Executive Compensation,
Risk Management Are Expanded in Release No. 33-9089" in the December 18,
2009, issue of Accounting & Compliance Alert, the SEC issued Release
No. 33-9089, Proxy Disclosure Enhancements, just hours after the
commissioners approved the changes at a public meeting.
The SEC said it scaled back some of the changes from the proposed version of the rule, Release No. 33-9052, so that the amendments could be put in place for proxy season, but it hopes to address some of the other topics, such as adding to the number of executives for which compensation has to be disclosed and ending an exemption that permitted some companies not to reveal their performance target data, in upcoming proposals.
The changes that were implemented include increasing the amount of information companies will have to provide about the board's role in risk management and director qualifications.
The summary compensation table and director compensation table as described
in Item 402 of Regulation S-K will have to provide the aggregate grant
date fair value of stock and options awarded during the year according
to FASB ASC 718, Compensation-Stock Compensation, formerly SFAS
No. 123(R).
12/18/09 -- SEC Extends ABS Web Disclosure Option in Release No. 33-9087
As discussed in the article entitled "ABS Web Disclosure Option Extended
in Release No. 33-9087" in the December 17, 2009, issue of Accounting
& Compliance Alert, the SEC granted a one-year extension of a disclosure
option for sponsors of securitized trusts in Release No. 33-9087, Extension
of Filing Accommodation for Static Pool Information in Filings With Respect
to Asset-Backed Securities.
The rule amends Rule 312 of Regulation S-T by extending its effectiveness to include the static pool, or underlying asset information, in asset-backed securities (ABS) offerings issued before December 31, 2010.
Regulation S-T provides the guidelines for submitting electronic filings to the SEC. Rule 312 allows pool information posted to the trust sponsor's website to be considered part of the prospectus and had been set to expire at the end of this year.
The extension was proposed in October in Release No. 33-9074, with a comment period that ended November 23.
The SEC's division of corporation finance said the extra year would give it time to review the ABS offering process and static pool disclosures. The staff wants to consider the costs associated with submitting the information to the EDGAR filing system, which the SEC believes is still not capable of handling the massive amounts of data in the static pools.
12/16/09 -- SEC Reopens Comment Period for Proxy Access in Release
No. 33-9086
As discussed in the article entitled "Comment Period for Proxy Access Proposal Is Reopened in Release No. 33-9086" in the December 15, 2009, issue of Accounting & Compliance Alert, the SEC recently said in Release No. 33-9086, Facilitating Shareholder Director Nominations, that it wants the public's views on the additional data and related analyses the commission received after the close of the original comment period on August 17.
In Release No. 33-9046, the SEC proposed changes to facilitate the rights of shareholders to nominate directors on corporate boards.
According to Release No. 33-9086, the SEC staff continues to expect to make a final recommendation to the commission in early 2010.
Comments on the data and related analyses are due no later than 30 days after the publication of the commission's release in the Federal Register, which normally occurs a few days after a rule is posted to the SEC's website.
12/14/09 -- SEC Seeks Comments on 2010 Mutual Fund Risk/Return Summary
Taxonomy
As discussed in the article entitled "Comments Sought on 2010 Mutual Fund Risk/Return Summary Taxonomy" in the December 11, 2009, issue of Accounting & Compliance Alert, the SEC recently said that it has developed the 2010 Mutual Fund Risk/Return Summary Taxonomy, an update to the 2008 taxonomy.
Public comments are due December 31.
The agency said the updates were made primarily "to optimize the taxonomy for use in the commission's previewer and viewer which are currently being updated to support this taxonomy." The update includes what the SEC classified as minor technical edits and corrections to the 2008 edition. The element names and content of the taxonomy remain unchanged.
After the staff completes its review of the feedback next year, the taxonomy will be finalized for use with the SEC's systems.
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