At a glance
The SEC adopted amendments to its disclosure requirements in August 2018. Some incremental disclosures could be required in third quarter financial statements.
As outlined in In brief US2018-21,SEC simplifies and updates disclosure requirements
, on August 17, 2018, the SEC amended its rules to eliminate, modify, or integrate into other SEC requirements certain disclosure rules. The amended rules become effective 30 days after publication in the Federal Register (as of September 18, 2018, the amended rules have not been published). Absent further guidance, we understand the changes should be applied to any filing made on or after the effective date. If published soon, the new rules may impact financial reporting for the period ending September 30, 2018.
Why is this important?
The amended rules generally reduce disclosures but some provisions added new disclosure requirements. For example, in interim financial statements, registrants will be required to provide an analysis of changes in each caption of stockholders’ equity and noncontrolling interests, which will need to be accompanied by dividends per share and in the aggregate for each class of shares. These disclosures are required to be provided for the current and comparative quarter and year-to-date interim periods.
There is no specified format that must be followed to present the interim information about changes in stockholders' equity. We believe, for example, that a calendar year-end company reporting for the third quarter can comply with the new requirement by either:
- presenting an analysis of changes in each caption from January 1 to September 30 and a separate analysis from July 1 to September 30 for each year; or
- "stacking" each of the quarter-to-date analyses (January 1 to March 31, April 1 to June 30 and July 1 to September 30) to build a year-to-date analysis for each year.
There may be other acceptable presentations; however, the disclosure must be presented in the form of a reconciliation either as a separate statement or in the footnotes.
Registrants will need to consider the impact of the new rules on SEC filings made on or after the effective date. For example, if the amended rules become effective on October 24, then, absent further guidance, we understand that a calendar-year end registrant would need to apply the amended rules to any SEC filings made on or after that date (which would include Form 10-Q for the period ended September 30, if not filed prior to October 24).