Jen: This is the PKF Texas Entrepreneur’s Playbook. I’m Jen Lemanski, and I’m here with Chip Schweiger, one of our audit Directors and one of the faces of the PKF Texas SEC team. Chip, welcome to the playbook.
Chip: Thanks, Jen. Good to be here.
Jen: So, I know this is the time of year where public companies are getting ready to file their financial statements, their disclosures… What do they need to look at with their Form 10-Ks when they’re getting ready to prepare those?
Chip: Yeah. So, Jen, last year we put out an analysis: comment letter trends from the SEC based on the last three years of comments. We saw some things on there that you would expect: the use of non-GAAP financial measures, comments on the management’s discussion and analysis and comments on fair value measurements, but there are also some new items on the list.
Jen: What kind of new items?
Chip: Revenue recognition, based on the implementation of the new revenue recognition rules last year for public companies, was high on the list. Intangible assets and goodwill is getting a lot of traction, and interestingly, comments to companies that deal with countries that are State Sponsors of Terrorism had a lot of hits last year from the SEC. In fact, in 2016, it was 15th on the list; last year, it was moved up to five on the list.
Jen: Are we going to see that more in the future, and is there anything else?
Chip: Well, I think we’ll continue to see comments about State Sponsors of Terrorism. I think that we’ll continue see comments on revenue recognition, and with public companies implementing the new lease accounting standards this year, we should expect to see comments on these accounts as well.
Jen: So, definitely a lot of things to be taking into consideration as they’re getting ready to file everything, correct?
Chip: Absolutely.
Jen: Perfect. Well, we’ll get you back to talk a little bit more about items affecting public companies. Sound good?
Chip: Sounds good.
Jen: For more information about SEC-related topics, visit www.pkftexas.com/SECDesk. This has been another Thought Leader Production brought to you by PKF Texas – The Entrepreneurs Playbook. Tune in next week for another chapter.