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Replay - SEC now: Today’s landscape and recent developments · PwC's accounting podcast

0:00
SPEAKER_00: Thought Leadership from PWC's National Office.
0:07
SPEAKER_02: Hello, and welcome back to PWC's Accounting Podcast.
0:11
SPEAKER_02: I'm Heather Horn.
0:12
SPEAKER_02: Last week we highlighted a replay of one of our most popular episodes of 2025, the kickoff to our financial statement presentation and disclosure series.
0:21
SPEAKER_02: Today we're bringing you another replay to help with the year on close, spotlighting our series with a focus on SEC reporting.
0:29
SPEAKER_02: We'll include links in the show notes to each episode in the series, but today we thought we'd replay the first episode, which sets the stage with a high-level discussion of recent SEC developments and key reporting themes.
0:41
SPEAKER_02: This is an important one to listen in on before you finalize those year in financial statements.
0:47
SPEAKER_02: In today's episode, Kyle Moffitt, PWC's professional practice leader, serves as guest host and is joined by Scott Feely and Lindsay McCord, both partners in PWC's national office focused on SEC financial reporting.
1:00
SPEAKER_02: With that, let's start the episode.
1:02
SPEAKER_02: And after you tune in, I encourage you to check out the rest of the series as well.
1:08
SPEAKER_04: Scott, Lindsay, welcome.
1:10
SPEAKER_04: Really excited to have you guys here today.
1:13
SPEAKER_04: The last time we've we've talked about SEC developments or covered them was back in May.
1:19
SPEAKER_04: And that was when Atkins was put in the role of chair, chairman of the SEC.
1:26
SPEAKER_04: We have hosted Kurt Hall, the SEC's chief accountant for one of our webcasts.
1:30
SPEAKER_04: We've also had uh Commissioner Marky Wade on.
1:33
SPEAKER_04: Um and so I think we've got a lot of good insights there.
1:36
SPEAKER_04: But I think today, having both of you on dive a little bit deeper into kind of what we're seeing, what we're hearing.
1:41
SPEAKER_04: Scott, obviously, in your role as SEC and Capital Markets Leader, you follow the SEC very closely.
1:46
SPEAKER_04: You work on uh one of the Center for Auto Quality's uh task force focused on uh financial reporting.
1:53
SPEAKER_04: So it really puts you front and center, not just with our clients, but also with others uh from across the profession.
1:59
SPEAKER_04: And Lindsay, of course, as as former uh Corpfin chief accountant, um, you know, certainly want to get some insights first from you on the new leadership team within the SEC.
2:09
SPEAKER_04: Um, obviously Atkins has been, you know, working on it.
2:12
SPEAKER_04: I think it's been a little bit slower than maybe we've seen in the past, but I think now where we are, it's it seems that he's slowly building his team.
2:18
SPEAKER_04: Turn to you and talk a little bit about some of the leadership and maybe where we expect uh the leadership team to be focused on.
2:24
SPEAKER_03: Great.
2:24
SPEAKER_03: Um, yeah.
2:25
SPEAKER_03: So we did see this summer some activity on with Chair Atkins and who he was naming for his various roles.
2:33
SPEAKER_03: Again, I'll focus on maybe three of the roles that tend to be ones that companies and preparers interact with the most.
2:39
SPEAKER_03: Um, the first being the division of enforcement, the one that no one wants to interact with.
2:45
SPEAKER_03: And um, we saw the division chair, I mean the division director join Judge Meg Ryan, which I don't know.
2:53
SPEAKER_03: Meg Ryan.
2:53
SPEAKER_03: Yeah, Meg Ryan, but I also don't know if I've seen a judge frequently in the division of enforcement.
2:58
SPEAKER_03: So, I mean, you know, kind of makes me wonder how that division is going to be run.
3:04
SPEAKER_03: Um, but she joined in September of 2025, early in the month, so before shutdown.
3:10
SPEAKER_03: Um, and kind of background from Miss Ryan is most notably she was a senior judge of the U.S.
3:17
SPEAKER_03: Court of Appeal for the Armed Forces and was actually nominated by president, former president George Bush, confirmed by the U.S.
3:24
SPEAKER_03: Senate.
3:25
SPEAKER_03: So, again, someone who actually really understands the process that maybe the commissioners have to go through when they're going through their nomination.
3:31
SPEAKER_03: Um, she's also been a lecturer and professor at both Harvard Law School, Notre Dame, and George Washington University Law School, and then also a partner at a law firm.
3:41
SPEAKER_03: So interesting.
3:42
SPEAKER_03: A lot of experience.
3:43
SPEAKER_03: A lot of experience, but also again, a lot of like actual government experience or understanding legislation, which that will be interesting for the division of enforcement, especially Chair Atkins, kind of making the point that wanting the division to kind of go back to its bread and butter type of actions.
3:59
SPEAKER_03: So having someone with that true government background maybe could um kind of focus on that.
4:05
SPEAKER_04: Yeah, and we heard and we've heard, right?
4:07
SPEAKER_04: Like the focus will be you know, fraud, insider manipulation, insider trading, which is kind of the standard of you know what what we'd expect to see.
4:15
SPEAKER_03: What you expect to see in government, like uh from an enforcement perspective.
4:19
SPEAKER_03: And then um, you have the Office of Chief Accountants at the SEC.
4:23
SPEAKER_03: This is the uh group that kind of manages the um PCOB budget oversight, also does the FASB oversight, and so, and then also has the international relationship from an accounting standpoint.
4:35
SPEAKER_03: So, as you mentioned, Kurt Hall joined um the SEC over the summer and joined in the beginning of July.
4:42
SPEAKER_03: And Kurt has a lot of years of experience over 26 years as a partner at EY, last as deputy vice chair of EY's Global Assurance Professional Practice.
4:52
SPEAKER_03: Again, that brings both international experience and audit experience.
4:57
SPEAKER_03: So when you think of OCA and their roles of overseeing the PCOB, but also this kind of player in the international accounting world, that fits right in on top of what all of us have, which is the basic gap accounting background.
5:09
SPEAKER_03: Um, but what I found fascinating when Kirk got announced was that he was an associate chief accountant, just like you or Kyle, just like I was at one point and the division of corporation finance.
5:19
SPEAKER_03: And what was even better is that he authored the financial reporting manual back when it was just staff, like a staff manual.
5:27
SPEAKER_03: Yeah, staff.
5:28
SPEAKER_03: Um, so that was great to hear of someone who really will be both engaged from the agency perspective, but has an understanding of how core fin operates.
5:36
SPEAKER_03: So I think that could be a great relationship.
5:38
SPEAKER_03: And then last, um, let's get to the division of corporation finance.
5:41
SPEAKER_03: That's the one that I know we spent a lot of years in.
5:44
SPEAKER_03: I know, Scott, you've had to call down to the SEC a few times now and get to know some of those individuals, especially some of the committees.
5:52
SPEAKER_03: But so Jim Maloney was selected as the division's director.
5:58
SPEAKER_03: And also, like Kurt, Jim had a past experience in the division of corporation finance um from 94 to 2000.
6:05
SPEAKER_03: He was an attorney advisor and later special counsel to the Office of Mergers and Acquisitions in Court Fenn, which also he did rulemaking.
6:12
SPEAKER_03: He worked on proposing and adopting release of regulation MA while there.
6:17
SPEAKER_03: So that's a director who already has experience with the SEC like rulemaking process, but actually writing it and drafting.
6:24
SPEAKER_03: So really going to be effective there and be able to hit the ground running.
6:27
SPEAKER_03: Um, but most recently, Jim was a partner at Gibson Dunn and Couture and has served as a long-standing co-chair of the firm securities, regulation, and corporate governance practices.
6:37
SPEAKER_03: So a lot of knowledge, a lot of experience we're talking about with these three individuals.
6:42
SPEAKER_03: And I think it'll be great to see how um the administration comes together and what changes.
6:49
SPEAKER_03: I know we're gonna talk about the rulemaking agenda here soon, but I mean, what do you think about the division of corporation finance and with Jim having prior experience and then even Kurt having prior experience?
6:59
SPEAKER_03: What are your thoughts?
7:00
SPEAKER_03: Kyle.
7:01
SPEAKER_04: I mean, I think, look, I think they'll hit the ground running, right?
7:04
SPEAKER_04: I think that's the the key is is they were selected because of their experiences, um, not just obviously with a regular with the SEC in the past, but also working closely with the SEC over many, many years.
7:18
SPEAKER_04: Um, you know, Jim and Kurt are both well known, you know, at the staff by not a lot of folks there.
7:24
SPEAKER_04: So I, you know, obviously no no you know huge changes there.
7:27
SPEAKER_04: Um turning now to the SEC's agenda, we talked a little bit about it already, but Scott, we you know, we saw a number of round tables um over the course of the spring and the summer.
7:36
SPEAKER_04: Obviously, you know, we we all suspect and and we know that it's it's probably ahead of um whatever initiatives they have on the rulemaking front.
7:43
SPEAKER_04: So they've gathered a lot of information.
7:45
SPEAKER_04: Um the spring uh Ray Flex agenda was published.
7:49
SPEAKER_04: I know spring it was published in the fall.
7:51
SPEAKER_04: So the fall one, I guess, will be posted in in the spring.
7:55
SPEAKER_04: Um so it'll be interesting to see what really is on there because there's a lot on there, though, from the the spring agenda that I think is is going to be uh telling as to the direction the SEC is gonna head moving forward.
8:06
SPEAKER_04: Um so when you think about what uh some of the priorities, like I guess broadly, like I don't want to get in there's a lot listed there, but I really want to focus on our audience, what they'll be, what they should be expecting.
8:18
SPEAKER_04: Um uh kind of kick off with maybe some of your thoughts on that.
8:22
SPEAKER_01: Sure.
8:22
SPEAKER_01: Yeah, maybe the first thing I'll say is I think it's pretty interesting.
8:24
SPEAKER_01: Every time we have a change in administration, you know, I sometimes equate it to like Madison Square Garden, where they play basketball games and hockey games over the course of the winter.
8:32
SPEAKER_01: And, you know, between games, there's a changing out of the playing surface where you don't really see anything happening on top, but there's a lot happening below the surface.
8:41
SPEAKER_01: And so, you know, we do get this spring reg flex agenda published in um in in late fall.
8:48
SPEAKER_01: But you know, it takes, you know, when we have a new administration and a new commission, the priorities, for better or worse, they flip almost 180 degrees.
8:56
SPEAKER_01: And so it takes some time to really put it together.
8:59
SPEAKER_01: And I think that's what that's what we see here.
9:01
SPEAKER_01: Um in the intervening period, you know, they have other mechanisms to get mech uh messages into the marketplace, whether that be um, you know, through through staff speeches, comment letters, um, et cetera.
9:12
SPEAKER_01: But um, I I guess in terms of you know, like what the uh the agenda tells us, I don't I don't think there are any real surprises there.
9:20
SPEAKER_01: I think it was really focused on capital formation that is totally consistent with what you might expect from a Republican administration.
9:26
SPEAKER_01: Um historically, Republican administrations have been focused on capital formation.
9:30
SPEAKER_01: Um, Democrat-led commissions and administrations have tended to be more focused on investor protection.
9:36
SPEAKER_01: Um so again, no surprises there.
9:39
SPEAKER_01: Wide ranging from crypto to EGC and you know, broader filer status questions.
9:46
SPEAKER_01: Um there's a concept release out on foreign private issuers, um, some contemplation of modernizing a shelf registration process, et cetera.
9:54
SPEAKER_01: So I was just gonna take one or two of those and just say a few more words about it.
9:57
SPEAKER_01: So on foreign private issuers, we got a concept release.
10:00
SPEAKER_01: I think very broadly, you know, foreign private issuers enjoy a pretty relaxed um reporting regime by comparison to domestic registrants.
10:09
SPEAKER_01: It's really intended to leverage their home country reporting requirements, right?
10:14
SPEAKER_01: So this concept of a foreign private issuer and the accommodations that they enjoy was really built on a foundation where they had some home country reporting requirements.
10:24
SPEAKER_01: And over time, you know, the the composition of the foreign private issuer base in the United States has really evolved to the point where a lot of these registrants are using um the US marketplaces, certainly their primary and perhaps their sole um listing.
10:39
SPEAKER_01: And so the dynamics have changed.
10:41
SPEAKER_04: You don't have the same dual-listed companies that you once had years and years ago where everyone was dual, you know, they were all dual-listed for the most part.
10:48
SPEAKER_01: So it just calls into question, you know, the foundation upon which the foreign private issuer model was originally built upon.
10:53
SPEAKER_01: So they're revisiting, we're potentially revisiting that.
10:56
SPEAKER_01: Um, on filer status, a bundle up filer status, emerging growth company.
11:01
SPEAKER_01: Uh it's a bit of a maze of um.
11:04
SPEAKER_04: Oh, it's easy.
11:04
SPEAKER_01: Oh, yeah, you need a you need an advanced degree to understand this stuff.
11:08
SPEAKER_01: Um so a bit of a maze of overlapping criteria.
11:11
SPEAKER_01: You certainly have the basics of accelerated filer status, non-accelerated filer, accelerated filer, large accelerated filer.
11:17
SPEAKER_01: Um, but you also have other categories of filers, newly public companies, small reporting companies, um, emerging growth companies.
11:25
SPEAKER_01: And in some cases, they they interact with each other.
11:28
SPEAKER_01: And so I think there's a view down at the SEC that there's um, well, maybe it's multidimensional, right?
11:34
SPEAKER_01: Like there's maybe the first dimension is can we rationalize some of those categories to make them fit together a little bit more tidally?
11:42
SPEAKER_01: Um I think maybe there's a second to men uh dimension to it, which is you know, should the population um, you know, for any of these categories that might enjoy, you know, some reduced level of reporting, accommodation, et cetera, should that population be expanded?
12:00
SPEAKER_01: You know, is the five-year uh timeline for emerging growth companies, is that still fit for purpose, et cetera?
12:06
SPEAKER_01: And then maybe the third dimension is, you know, inside of each of those populations, are there, you know, accommodations that might be made more broadly, um, more broadly available.
12:16
SPEAKER_01: Um I was just gonna hit two other two other things real quick.
12:19
SPEAKER_01: One was quarterly reporting.
12:21
SPEAKER_01: I know we did a um a separate podcast on that, so I won't go deep on it, but that is certainly on their agenda.
12:26
SPEAKER_04: That is that and that is the topic, I think, of the day.
12:29
SPEAKER_04: Um it is whether you're talking to to boards, audit committees, you know, executives, um, everyone, that's all they want to know.
12:38
SPEAKER_04: Um, you know, what do we expect to see with respect to quarterly reporting?
12:41
SPEAKER_04: So definitely great that you plugged that episode because I think it's it's very worthwhile uh watching.
12:46
SPEAKER_03: And even I think it talks about the timing around it too, kind of like alluding to the process and all, which was great information I found people are asking.
12:53
SPEAKER_01: Yeah, it's kind of interesting because I know I started with the foreign private issuer concept release, but there are aspects of this, you know, um, what they're looking at from a quarterly reporting standpoint that starts to look like you know the foreign private issuer model, which is really a six-month reporting, a six-month reporting model.
13:08
SPEAKER_03: Well, I'll layer on that.
13:10
SPEAKER_03: One thing I found was interesting about that is if you change the definition of foreign private issuer, you would have more companies that would be entering into the domestic 2K 10 Q program, which under the 10Q program today, you have three Q's.
13:24
SPEAKER_03: Well, if you change the cadence and have an optionality of semi-reporting, then all those companies that lose the FPI status of half-year results can opt in to half-year again.
13:35
SPEAKER_01: So they can retain their cadence.
13:36
SPEAKER_03: Like there is an actual, to your point, there is some relationship with these rulemakings that are very well aligned.
13:43
SPEAKER_01: Yeah, yeah.
13:44
SPEAKER_01: The last thing I was gonna say was uh, and I won't say much on it, but I was gonna hit crypto just to say that there's a couple of uh initiatives on the flex agenda around crypto.
13:51
SPEAKER_01: Nope, again, no surprise, it's really intended to bring some regular regulatory clarity to that um to that environment.
13:56
SPEAKER_04: Yeah, yeah.
13:57
SPEAKER_04: No, look, I think a lot, a lot really to pay attention to, I think, in the in the coming coming months.
14:02
SPEAKER_04: But certainly I think once we see the next agenda, at least for the fall, published, and then of course see them return back to work, we'll see them and we've closely follow, you know, a lot of the conferences, the speaking engagements that that all of these uh parties will participate in over the coming months.
14:19
SPEAKER_04: We'll have a lot more insight as to maybe directions, and we certainly can hopefully share those insights on future episodes here.
14:25
SPEAKER_04: Um but Lindsay, I just want to turn to you.
14:27
SPEAKER_04: Anything that that you want to add to just kind of the your observations or thoughts as or you're talking to even clients, um, what do you think is notable or noteworthy on the rulemaking agenda?
14:38
SPEAKER_03: So for me, I think one of the things I've focused on, and again, as someone who actually did rulemaking at the SEC, I think of if I was there right now, putting myself in their shoes, what would I be feeling?
14:49
SPEAKER_03: And it's the what is the priority?
14:52
SPEAKER_03: Because we know crypto is a priority of the chair.
14:55
SPEAKER_03: We know that the words fast tracked have been used for quarterly reporting.
15:00
SPEAKER_03: We know that I know, Scott, you mentioned there's a view at the SEC, down at the SEC about maybe trying to align the um filer status.
15:07
SPEAKER_03: But I think there's a view externally of people wanting to actually get some of this done.
15:13
SPEAKER_03: And, you know, the SEC's really kept an open dialogue with the outside during this administration to date so far and a lot of this summer with all the roundtables to get feedback.
15:23
SPEAKER_03: So, one, I think the roundtables gave a lot of feedback that they can jump in and know the direction of where to go, especially with they were on the starting series of the joint CFTC and SEC roundtables related to crypto and like who has ownership of what.
15:40
SPEAKER_03: And so they'll have to pick that back up.
15:42
SPEAKER_03: But so they've had got all this great feedback to really hit the ground running, but you still have only a certain number of staff, and the shutdown has kind of delayed a lot of that.
15:51
SPEAKER_03: You only have a certain time period.
15:53
SPEAKER_03: Two years.
15:54
SPEAKER_03: And the this administration has made it clear they're gonna do 90-day comment periods for any sort of response back feedback, which is great because that's something that people were begging for the last administration.
16:06
SPEAKER_03: But then if you take three months to get responses and then you have to do a rulemaking, it kind of drives out.
16:11
SPEAKER_03: You could see where all of these priorities, we might see proposals, you know, in the next six months or whatever, but when is gonna be the adoption?
16:19
SPEAKER_03: And then you have the effective date, just like the FASB, you know, just because you adopt something doesn't mean that it's effective for that date.
16:26
SPEAKER_03: So I think it's that is just kind of like there's a lot of priorities.
16:29
SPEAKER_03: So what is gonna go first?
16:31
SPEAKER_03: What's the ordering of it?
16:33
SPEAKER_03: Um, and how can we also, we always get concerned from both our roles as advisors and auditors, and then also as preparers of having too much on your plate.
16:44
SPEAKER_03: And so, how do you order this to make sure that preparers are getting the benefit?
16:49
SPEAKER_03: If there's going to be relief, there is a burden taken from them, but also that they have time to figure out what their processes and controls are for that.
16:57
SPEAKER_04: So it is certainly challenging.
16:59
SPEAKER_04: Um, but it kind of leads me to the next point or or area I want to focus on, and that's comment letters.
17:05
SPEAKER_04: Um, and so as I think about kind of where you know what we have seen from the SEC of the last few years, obviously a lot of comments, a lot of comment letters, you know, lots of companies getting comments, a lot of comments within those comment letters, um, a lot of push for enhanced disclosures, more details surrounding a lot of different uh, you know, topics, you know, obviously macroeconomic events, geopolitical conditions, you know, and just everything else you name it, tariffs, trade.
17:36
SPEAKER_04: And I think we need to be, you know, obviously companies to be thinking about that, right?
17:40
SPEAKER_04: And what those disclosures should look like.
17:42
SPEAKER_04: Because I do think that's gonna be an area the staff will focus on.
17:44
SPEAKER_04: But Scott, you talk a little bit about just kind of what are we noticing?
17:47
SPEAKER_04: Are we seeing any changes yet?
17:49
SPEAKER_04: New administration, does it how long does it take before we start to see a change?
17:52
SPEAKER_04: I I kind of know my own views on it.
17:54
SPEAKER_04: Um but any anything you can share on on climate letters.
17:58
SPEAKER_01: Yeah, I guess I'll say maybe two things.
17:59
SPEAKER_01: What one is um maybe I'll comment on you know direction of travel in terms of volumes and/or what I call stickiness of the comments, and then maybe I'll say a couple of words on um on the so-called top top 10, right?
18:11
SPEAKER_01: What are the most frequent areas for for comment?
18:14
SPEAKER_01: Um certainly over the past three or four years, we saw, you know, a um you know a reversal of a trend that had played out over many, many years, which was that you know, the volume of comments that you were seeing come out of the SEC as a result of um reviews tended to, you know, be going down over time.
18:34
SPEAKER_01: We certainly saw that reverse over the past um three or four years.
18:38
SPEAKER_01: And I would say as we sit here today, it's a little bit um little bit early days, but you know, certainly a modest reduction in total volumes.
18:47
SPEAKER_01: And I would say maybe similarly, you're seeing, you know, in addition to a modest reduction in total volumes, you're seeing, you know, registrants perhaps a bit um more efficient in being able to resolve comments that come in a little bit less sticky, right?
19:03
SPEAKER_01: Fewer rounds, a little a little bit less sticky in terms of um in terms of you know running those comments to to resolution.
19:09
SPEAKER_01: I was gonna say in terms of um the top 10 itself, I sometimes joke that you know these don't change that much.
19:15
SPEAKER_01: So we always want to talk about them.
19:16
SPEAKER_01: I can tell you they don't.
19:18
SPEAKER_01: This top 10 list um it doesn't change that much.
19:20
SPEAKER_01: If I recall well, I think last year you made fun of me for using uh on maybe this podcast or or similar podcast uh for using the term campaign.
19:28
SPEAKER_01: So this top 10 doesn't really bounce around, absent maybe a new accounting standard that drives a temporary uptick in, you know, in that particular area, or what I call campaigns.
19:39
SPEAKER_01: And you can think about campaigns as um, you know, climate, cyber.
19:43
SPEAKER_01: It's a campaign at one point around individually tailored accounting principles, you know, so things like this that will again move topics maybe into the top 10 or certainly up inside the top 10, but typically on a temporary, um, a temporary basis.
19:56
SPEAKER_01: So as we look at the top 10, um, you know, non-gap.
20:00
SPEAKER_01: Always at the top.
20:01
SPEAKER_01: Always at the top, um, mDNA, uh segments.
20:05
SPEAKER_01: So segments is one one of our movers.
20:07
SPEAKER_01: It's it's uh up from number four to number three, perhaps as a result.
20:11
SPEAKER_03: And this is as of 930, by the way, as of September 30th.
20:14
SPEAKER_01: Yeah.
20:15
SPEAKER_01: So perhaps as a result of the adoption of the new um segment segment um segment standard.
20:20
SPEAKER_01: Again, it was disclosure, disclosure driven.
20:22
SPEAKER_01: So we've seen a little bit of an uptick there.
20:23
SPEAKER_01: I know we're gonna go deep on it in a different uh podcast in this series.
20:27
SPEAKER_01: Um those comments to date have been largely oriented towards you know complying with the standard.
20:33
SPEAKER_01: I think there was some speculation that it could you know invite the SEC staff to go and revisit and do a more comprehensive review of segment disclosures.
20:42
SPEAKER_01: I don't think that's really been the case, but again, I'll leave that for um the deeper dive.
20:46
SPEAKER_04: Yeah, if you're gonna get segment comments before you'd and you know how you determine your operating segment today versus I mean, there's no change in that.
20:53
SPEAKER_04: So I would presume this staff's just gonna still take the same approach.
20:56
SPEAKER_04: But there's still some of those comments.
20:57
SPEAKER_04: We still see them.
20:58
SPEAKER_04: We still see those comments.
20:59
SPEAKER_03: But that's because that's just bread and butter of application of the segment standard.
21:02
SPEAKER_03: Yeah, exactly.
21:03
SPEAKER_01: Exactly.
21:03
SPEAKER_01: Um and then certainly RevRec, it's always on the always on the list, number number four, and then round rounding it out, it's goodwill and impairments, business combinations, inventory cost of sales, debt versus equity.
21:13
SPEAKER_01: So there's a theme there in terms of non-standard transactions when you look at you know impairment business combinations, debt versus equity, um, you know, so on and so forth.
21:22
SPEAKER_01: So that kind of rounds out the um the top 10.
21:25
SPEAKER_04: So so you you you mentioned a lot of topics, right?
21:27
SPEAKER_04: Like debt equity, a good a good topic, right?
21:29
SPEAKER_04: Now we know the you know the FASB um has a prior, or you know, they're they're always considering projects, uh, and that's obviously one of those areas um in in a lot of these as I as I think about just the segments, as you indicated, like it's always a topic of of focus, but I I expect it's gonna rise a bit.
21:46
SPEAKER_04: Um so we we will cover, as you mentioned, the podcast.
21:48
SPEAKER_04: We will have a podcast on non gap, mD and a segments, revenue, and also uh business combinations.
21:54
SPEAKER_04: So so those areas will be focused on.
21:57
SPEAKER_04: Um, Lindsay, you were at the staff for For a number of years.
22:01
SPEAKER_04: You know, obviously you serve in a lot of different roles.
22:04
SPEAKER_04: I think, you know, one of the things that listeners probably don't know is that you actually worked in uh the banking and financial services groups, um, two different groups that were there at the time, um, issuing comment letters, reviewing filings, issuing comment letters.
22:17
SPEAKER_04: Um, so it is any surprise there when you look at the topics, any reaction to the topics, maybe even a guess of where what you think might rise um to the top over the next few months?
22:28
SPEAKER_03: So I guess level setting on the data, which kind of Scott, you kind of alluded to, um, often when these top 10 are presented, it's focusing on the top 10 comments related to 10K's, 10 Q's.
22:40
SPEAKER_03: Your recurring registrant population.
22:43
SPEAKER_03: There's not a lot of inclusion of the registration statements, but I would expect that they would have similar themes.
22:49
SPEAKER_03: Um, and the other thing is just like the timing of the review program, the timing of when letters are released.
22:54
SPEAKER_03: Um, all that comes into maybe you it'll look like there was a volume change when really it wasn't.
22:59
SPEAKER_03: It's just maybe a group of letters got resolved late this summer.
23:03
SPEAKER_03: And so you see timing.
23:05
SPEAKER_03: Yeah.
23:05
SPEAKER_03: So I always kind of take it with a grain of salt when I see some movement.
23:09
SPEAKER_03: Um, but it makes sense to me and it's consistent the entire time I was at the staff of these topics.
23:17
SPEAKER_03: And that's because these topics tend to be areas that are highly judgmental, like your critical accounting estimate to score.
23:24
SPEAKER_04: Significant accounts and the financials, right?
23:27
SPEAKER_03: Um, so those areas tend to be asking questions.
23:31
SPEAKER_03: And we all know judgment is shaped by experience and perspective.
23:35
SPEAKER_03: Each of us probably could come to different judgments, but the same conclusion.
23:41
SPEAKER_03: And a lot of these accounting models that you're talking about, like goodwill impairment, or when you think of sometimes revenue recognition, or all of these things, there are judgments baked in there.
23:51
SPEAKER_03: And while Scott and I might have two different judgments, we could still get to the same conclusion.
23:58
SPEAKER_03: And based on that, that's why, in my view, why these continue to be hot topics.
24:03
SPEAKER_03: It's the area of judgment.
24:05
SPEAKER_03: It's the fact that the SEC staff also has their own perspective, their own experience over years of issuing comments, over years of talking to companies about their fact patterns.
24:14
SPEAKER_03: So when they read disclosure and something maybe looks slightly different than what their expectation was or the last time they talked to a company, they're gonna inquire if it's a material era area.
24:25
SPEAKER_03: But that's why I think it's important.
24:27
SPEAKER_03: And one thing I talk with clients about all the time is you know, put your facts and circumstances into that letter.
24:33
SPEAKER_03: Provide more clarity around your judgments you made.
24:36
SPEAKER_03: And generally the staff will respect that if it's reasonable judgment.
24:40
SPEAKER_03: And so have that dialogue because really they're just starting to entertain a dialogue of I want to understand more your judgment, because that's maybe not where my head was at when I read the disclosure.
24:50
SPEAKER_03: Um, and so it's important to give that information in the comment letter process.
24:55
SPEAKER_03: And that's where you can have maybe, Scott, maybe some of the reasons why we saw like a little less stickiness in the comment process is because we were advising our clients greatly.
25:05
SPEAKER_01: That's what we tell ourselves.
25:06
SPEAKER_01: We tell ourselves that.
25:07
SPEAKER_03: Well, really, they were just doing a great job of providing that clarity of the judgment.
25:11
SPEAKER_04: I think you highlight a really good point, which is for people to understand that it's just the start of the dialogue.
25:19
SPEAKER_04: Yes.
25:20
SPEAKER_04: Um, because the more that you're willing to put out there and share and share your judgments, um, I I agree with you.
25:27
SPEAKER_04: I do think they tend to go um a lot smoother.
25:30
SPEAKER_04: Um, those those conversations back and forth, written conversations back and forth with the SEC staff.
25:36
SPEAKER_04: Um, so a lot of great insights from both of you.
25:40
SPEAKER_04: Um, I I do want to close.
25:42
SPEAKER_04: I I have a question for for for each of you.
25:45
SPEAKER_04: Um, and it really is as you think about all the topics that are on the agenda um or or things that they're focused on, I guess what are you most interested in?
25:55
SPEAKER_04: Us that or what do you think our audience should be most interested in?
26:00
SPEAKER_04: What you take either of the two.
26:02
SPEAKER_04: Want to go first?
26:03
SPEAKER_03: Uh sure.
26:04
SPEAKER_03: Uh what I would love to see is a simplification of the filer status, as you might expect, Scott.
26:11
SPEAKER_03: Um I was there during 2018, 2019 when smaller reporting company status happened.
26:18
SPEAKER_03: I was there during the accelerated filer, large accelerator filer.
26:21
SPEAKER_04: You created this mess.
26:22
SPEAKER_04: Is that what you're telling us?
26:23
SPEAKER_03: I can tell you we struggled too at the staff when I was there.
26:27
SPEAKER_03: And on the outside, I sometimes am sitting there and you really have to think about the facts and circumstances.
26:33
SPEAKER_03: There is a disconnect between the smaller reporting company definition that was done in 2018 and non-accelerant accelerated filer.
26:41
SPEAKER_03: And then you layer on a margin growth company, which you have a different revenue threshold than the 100 million that you may have.
26:47
SPEAKER_03: If you're entering into first-time measurement of accelerated filer, large accelerator filer, smaller reporting companies, all of them.
26:54
SPEAKER_04: Sounds like a lot.
26:55
SPEAKER_03: I mean, that's I mean, just with that alone, it'd be great if there's some clarity there.
27:00
SPEAKER_03: And it was simple, so everyone didn't have to scratch their head at June 30th.
27:05
SPEAKER_04: And go and go to council all the time with the questions rather than just being able to apply it themselves.
27:10
SPEAKER_01: Yeah, I shouldn't have let Lindsay go first.
27:11
SPEAKER_01: I would have said that.
27:11
SPEAKER_01: Is that what you were gonna say?
27:12
SPEAKER_01: Oh, there we go.
27:13
SPEAKER_01: We've been dealing with that.
27:14
SPEAKER_01: We went deep recently on smaller reporting and how you how you enter and re-enter and status, and there's not enough aspirin in the world to figure all this stuff out.
27:23
SPEAKER_01: So a simplification would be really welcome.
27:25
SPEAKER_01: Maybe I'll just take one step back and just go back to my playing surface analogy and just say that you know, at this stage in the game, the playing surface has has changed.
27:33
SPEAKER_01: And while we've seen the SEC staff be active in terms of you know, speeches or or perhaps comment letters and so on and so forth, you know, the the most impactful tool in their arsenal being the rulemaking process is really likely to move pretty aggressively forward from here with you know the agenda out.
27:53
SPEAKER_01: So it would be it would be good for our audience to just stay um stay in tune with what is with what is happening there because I think there's gonna be developments coming fast and furious.
28:02
SPEAKER_04: Yeah, I I think you're right.
28:03
SPEAKER_04: I think you know, but my my takeaway always is look, if you're gonna focus on anything, you really got to be paying attention to what's going on with respect to the cadence of reporting and and quarterly versus semi-annual.
28:14
SPEAKER_04: Um, because I think that will be fast and furious.
28:17
SPEAKER_04: There is, you know, a 2018 concept release, a lot of feedback already um over the years on the topic.
28:24
SPEAKER_04: Um, and so I expect that to be to quick, fast and furious.
28:27
SPEAKER_04: Um, so um I will close with that.
28:29
SPEAKER_04: But I want to thank you both, really appreciate you both taking the time and joining me for the opening of this series.
28:36
SPEAKER_04: Thank you.
28:36
SPEAKER_04: Thanks for having us.
28:45
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28:47
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29:02
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