Comment: SEC’s proposal on semiannual reporting

In our response to the SEC’s Proposed Rule on Semiannual Reporting, we commend the Commission’s efforts to reduce regulatory burdens on companies with a focus on flexibility and simplification, while maintaining its goal to protect investors and promote fairness and efficiency in the securities markets.

We recommend that the SEC continue to engage further with companies and their audit committees as well as other stakeholders to understand the root cause of regulatory burdens on interim reporting (that is, whether the underlying issue is the cadence of interim reporting; the amount of financial and nonfinancial information required by U.S. GAAP, Regulation S-X, and/or Form 10-Q; or a combination of these factors).

From our perspective as independent accountants, our comments on this proposal focus on the following themes:

• The lack of an assurance framework for interim financial information included in earnings releases
• A potential expectations gap on the part of investors related to quarterly earnings releases for semiannual reporting companies
• Considerations related to potential changes in the timing of audit procedures
• Potential challenges that could arise from the proposed timing of the election to transition from semiannual to quarterly reporting
• Additional guidance required for merger and acquisition transactions

Download (PDF - 229.10KB) our letter to read our specific observations and recommendations on the proposal.