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SEC 3150 - Form 8-K (current report)
Publication date: 05 Sep 2023
us PwC SEC Volume 3150
.1 General
.11 What is Form 8-K and where can I find it?
Form 8-K is a reporting form used by SEC registrants to disclose the types of events that the SEC has determined to be “unquestionably or presumptively material.” Form 8-K is sometimes referred to as a “current report” to distinguish it from annual and quarterly reports, which are commonly referred to as “periodic reports.”
The following chart shows the specific Form 8-K disclosure items and cross references to (i) the location of the related disclosure requirements within Form 8-K, (ii) the relevant section(s) of the Division of Corporation Finance Form 8-K Compliance and Disclosure Interpretations, and (iii) additional guidance provided in the SEC Volume:
Form 8-K Item # |
Description |
Form 8-K CDI Refs |
Additional SEC Vol. Guidance |
|
|---|---|---|---|---|
1.01
|
Entry into a Material Definitive Agreement
|
102
202 |
||
1.02
|
Termination of a Material Definitive Agreement
|
103
|
||
1.03
|
Bankruptcy or Receivership
|
|||
1.04
|
Mine Safety - Reporting of Shutdowns and Patterns of Violations
|
|||
1.05
|
Cybersecurity Incidents
|
|||
2.01
|
Completion of Acquisition or Disposition of Assets
|
205
|
3150.2
|
|
2.02
|
Results of Operations and Financial Condition
|
106
206 |
||
2.03
|
Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant
|
107
|
||
2.04
|
Triggering Events that Accelerate or Increase a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement
|
108
208 |
||
2.05
|
Costs Associated with Exit or Disposal Activities
|
109
209 |
||
2.06
|
Material Impairments
|
110
|
||
3.01
|
Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing
|
211
|
||
3.02
|
Unregistered Sales of Equity Securities
|
112
212 |
||
3.03
|
Material Modification to Rights of Security Holders
|
213
|
||
4.01
|
Changes in Registrant’s Certifying Accountant
|
114
214 |
6150
|
|
4.02
|
Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review
|
115
215 |
3150.4
|
|
5.01
|
Changes in Control of Registrant
|
|||
5.02
|
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
|
117
217 |
||
5.03
|
Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year
|
118
218 |
3185
|
|
5.04
|
Temporary Suspension of Trading under Registrant’s Employee Benefit Plans
|
119
|
||
5.05
|
Amendments to the Registrant’s Code of Ethics, or Waiver of a Provision of the Code of Ethics
|
|||
5.06
|
Change in Shell Company Status
|
|||
5.07
|
Submission of Matters to a Vote of Security Holders
|
121A
|
||
5.08
|
Shareholder Director Nominations
|
|||
6.01
|
ABS Informational and Computational Material
|
|||
6.02
|
Change of Servicer or Trustee
|
|||
6.03
|
Change in Credit Enhancement or Other External Support
|
|||
6.04
|
Failure to Make a Required Distribution
|
|||
6.05
|
Securities Act Updating Disclosure
|
|||
6.06
|
Static Pool
|
|||
7.01
|
Regulation FD Disclosure
|
|||
8.01
|
Other Events
|
|||
9.01
|
Financial Statements and Exhibits
|
129
229 |
3150.2
|
The text of Form 8-K is available on the SEC’s website (https://www.sec.gov/files/form8-k.pdf).
.111 Which SEC registrants are required to disclose information on Form 8-K?
Most US domestic SEC registrants are required to disclose information on Form 8-K. See Exchange Act Rules 13a-11 and 15d-11 for the detailed requirements.
.12 What is the due date for Form 8-K?
A Form 8-K is generally due within four business days after the occurrence of the event which triggered the disclosure requirement. There are, however, some exceptions to this general principle:
- a Form 8-K furnished under Item 7.01 (or filed under Item 8.01 solely to satisfy reporting obligations under Regulation FD) is due in accordance with the requirements of Rule 100(a) of Regulation FD;
- a Form 8-K filed under Item 8.01 (other than one discussed in the preceding bullet point) has no mandatory filing deadline; however, prompt filing is encouraged; and
- a Form 8-K filed under Item 5.08 is due within four business days after the registrant determines the anticipated meeting date.
See General Instruction B.1 of Form 8-K for information on timing.
Additionally, under certain circumstances, the financial statements and associated pro forma financial information which are required by Item 9.01 of Form 8-K may be filed not later than 71 calendar days after the date the initial Item 2.01 Form 8-K reporting the completion of the acquisition was required to be filed. See Item 9.01 of Form 8-K. See also SEC 3150.25 for additional information regarding the due date of the financial statements and associated pro forma financial information required by Item 9.01 of Form 8-K.
[Editor’s note: Exchange Act Rules 13a-11(c) and 15d-11(c) provide a limited safe harbor with respect to failure to file a Form 8-K that is required solely pursuant to Item 1.01, 1.02, 2.03, 2.04, 2.05, 2.06, 4.02(a), 5.02(e) or 6.03. The limited safe harbor extends only until the due date of the registrant’s periodic report (e.g., Form 10-K or Form 10-Q) covering the period in which the reportable event occurred. The availability, implications and duration of the limited safe harbor are legal matters that a company should consider discussing with its legal counsel.]
.121 How is the Form 8-K due date determined?
The date on which the triggering event occurred is considered Day 0 when determining the Form 8-K due date. In other words, Day 1 of the four-business day period is the first business day after the date on which the triggering event occurred. For example, if an Item 1.03 triggering event occurred on Friday, May 26, 2023, then the due date for the related Form 8-K is June 2, 2023. In this case, the first business day following the occurrence of the triggering event (i.e., Day 1 of the four-business day period) is Tuesday, May 30, 2023 since Monday, May 29, 2023 was a federal holiday.
.13 What is the difference between “furnishing” and “filing” information in the context of Form 8-K?
Some information disclosed in a Form 8-K is considered furnished to the SEC rather than filed. The difference between these two concepts is a legal matter that registrants should consider discussing with their legal counsel.
As a general matter, we understand that material that is furnished and not deemed filed is not subject to a right of action under Section 18 of the Exchange Act and is not automatically incorporated by reference into a registration statement. Additionally, information that is furnished to the SEC in a Form 8-K is not subject to some of the elements of S-K 10 (e.g., relating to non-GAAP measures), while filed information would generally be subject to those requirements.
Information disclosed under Item 2.02 or 7.01 of Form 8-K is considered to have been furnished and not deemed filed unless the registrant specifically states that the information is intended to be filed under the Exchange Act or incorporates it by reference into a filing under the Securities Act or the Exchange Act. If disclosure is made under Item 2.02 or 7.01 of Form 8-K, all exhibits to the report relating to Item 2.02 or 7.01 are also deemed furnished, and not filed, unless the registrant indicates otherwise. See General Instruction B.2 of Form 8-K for further information.
Information disclosed under Item 8.01 of Form 8-K is considered filed.
.2 Completion of acquisition or disposition of assets (Item 2.01)
.21 What events trigger a requirement to file an Item 2.01 Form 8-K?
Disclosure is required under Item 2.01 if the registrant or any of its consolidated subsidiaries has completed the acquisition or disposition of:
- a significant amount of assets, other than in the ordinary course of business, or
- a significant amount of assets that constitute a real estate operation (as defined in S-X 3-14(a)(2)).
[Editor’s note: Instruction 1 to Item 2.01 specifies three situations in which disclosure under Item 2.01 is not required. The SEC staff has indicated that when considering those situations, the reference to “any person” means the company that has the obligation to file the Form 8-K. Accordingly, in situations where a wholly-owned subsidiary acquired a significant amount of assets from its parent, and both the subsidiary and the parent are reporting companies, Instruction 1 to Item 2.01 would generally exempt the parent from the requirement to file an Item 2.01 Form 8-K, but the subsidiary would not be exempted. Additionally, the SEC staff has indicated that this instruction does not apply to the sale of a subsidiary's equity, because the subsidiary would not be wholly-owned after the transaction is completed. See Exchange Act Form 8-K CDIs 205.03 and .05.]
.211 How are the terms acquisition and disposition defined?
The terms acquisition and disposition in the context of Item 2.01 of Form 8-K are defined in Instruction 2 to Item 2.01.
.212 How is the phrase “significant amount of assets” defined?
The phrase “significant amount of assets” as it is used in the context of Item 2.01 of Form 8-K is defined in Instruction 4 to Item 2.01. There are three definitions to be considered depending on the registrant’s facts and circumstances. It is important to note that the three definitions use different thresholds or calculation methodologies.
- Instruction 4(i) compares the proportion of the equity in the net book value of the assets or the amount paid or received for the assets to the registrant’s consolidated total assets using a 10% threshold;
- Instruction 4(ii) considers whether a business (as defined in S-X 11-01(d)) that is significant (as defined in S-X 11-01(b)) has been acquired or disposed using a 20% threshold; and
[Editor’s note: Instruction 4(ii) indicates that the acquisition of a business encompasses the acquisition of an interest in a business accounted for by the registrant under the equity method or, in lieu of the equity method, the fair value option. See SEC 4550.211 for a discussion of the term “business” under S-X 11-01(d).]
- Instruction 4(iii), which applies only to business development companies (as defined in Section 2(a)(48) of the Investment Company Act), compares the amount paid for the assets to the value of the registrant’s total consolidated investments using a 10% threshold.
[Editor’s note: We understand that business development companies only need to consider Instruction 4(iii) when assessing significance.]
.22 What is the due date of an Item 2.01 Form 8-K?
As discussed in SEC 3150.12, a Form 8-K is generally due within four business days after the occurrence of the event which triggered the disclosure requirement. Under certain circumstances as described below, a 71-calendar day extension (referred to as the Item 9.01 grace period) is available with respect to the requirement to file financial statements of an acquired business (including an acquired real estate operation) or acquired fund and any pro forma financial information (associated with that acquired business or fund) under Item 9.01. See SEC 3150.25 for further information relating to the Item 9.01 grace period.
See Item 9.01(a)(3) and (b)(2) of Form 8-K.
The potential availability of the Item 9.01 grace period does not change the due date of the Item 2.01 Form 8-K.
.23 What disclosures are required by Item 2.01 of Form 8-K?
The disclosures that are required by Item 2.01 are set forth in Item 2.01(a)-(f). The required disclosures will depend on the specific facts and circumstances as follows:
- dispositions require the disclosures specified in Item 2.01(a)-(d).
- acquisitions require the disclosures specified in Item 2.01(a)-(e).
- acquisitions by a registrant that was a shell company other than a business combination related shell company (each as defined in Exchange Act Rule 12b-2) immediately before the transaction require the disclosures specified in Item 2.01(a)-(f).
.24 What disclosures are required by Item 9.01 of Form 8-K relating to a business acquisition or disposition?
Business acquisitions required to be disclosed under Item 2.01 of Form 8-K:
- financial statements and any applicable supplemental information of the business acquired as specified in S-X 3-05 or 3-14 (S-X 8-04 or 8-06 for smaller reporting companies), and
- any pro forma financial information specified by S-X Article 11 (S-X 8-05 for smaller reporting companies).
Business dispositions required to be disclosed under Item 2.01 of Form 8-K:
- any pro forma financial information specified by S-X Article 11 (S-X 8-05 for smaller reporting companies).
[Editor’s note: Business development companies and funds should consider the relevant form requirements and all the facts and circumstances when assessing whether a Form 8-K is required to be filed and consult with legal counsel.]
.241 How should the financial statements relating to an acquired business/real estate operation/fund be prepared for purposes of Item 9.01 of Form 8-K?
For a business/real estate operation acquisition or fund acquisition required to be disclosed by Item 2.01 of Form 8-K, Item 9.01(a) of Form 8-K indicates that the registrant should file the financial statements (and any applicable supplemental information) specified in S-X 3-05 or 3-14 (or S-X 8-04 or 8-06 for smaller reporting companies) of the business/real estate operation acquired, or specified in S-X 6-11 of the fund acquired. The financial statements must be prepared pursuant to Regulation S-X except that financial statement schedules (S-X Article 12) do not need to be filed unless they are required by S-X 6-11.
See SEC 4550.3 regarding financial statements of an acquired business (other than an acquired real estate operation). See SEC 4555.24-.26 regarding financial statements of an acquired real estate operation. See S-X 6-11 for information relating to an acquired fund. See S-X 3-05(a)(1) and S-X 3-14(a)(1) regarding the omission of financial statements schedules.
.25 How does the 71-calendar day grace period provided in Item 9.01(a)(3) work?
Item 9.01(a)(3) of Form 8-K provides that, except as described below, the historical financial statements of an acquired business (including an acquired real estate operation) or acquired fund required by Item 9.01(a) of Form 8-K may be filed as an amendment to the Form 8-K in which the completion of the transaction was reported. The amendment must be filed no later than 71 calendar days after the original Form 8-K was required to be filed. Item 9.01(b)(2) of Form 8-K applies the 71-calendar day extension to any pro forma financial information required in connection with a business acquisition. This 71-calendar day extension is commonly referred to as the Item 9.01 grace period.
The Item 9.01 grace period is not available in connection with a transaction by a registrant that was a shell company other than a business combination related shell company (each as defined in Exchange Act Rule 12b-2) immediately before the transaction (see Item 9.01(c) of Form 8-K). Accordingly, the financial statements and pro forma financial information in connection with the type of transaction described in the preceding sentence are due no later than 4 business days after completion of the transaction. See Item 9.01(c) of Form 8-K.
Additionally, the Item 9.01 grace period is not available in connection with disposition transactions. Accordingly, the due date of the pro forma financial information relating to a business disposition required by Item 9.01(b) of Form 8-K is 4 business days after the completion of the disposition. See Exchange Act Form 8-K CDI 129.01.
.251 Is the Item 9.01 grace period the same as the grace periods provided in S-X 3-05 and S-X 3-14?
The Item 9.01 grace period is different from the grace periods described in S-X 3-05(b)(4)(i) and S-X 3-14(b)(3)(i). The Item 9.01 grace period only applies to the requirements of Form 8-K.
During the Item 9.01 grace period, a registrant is deemed to be current for purposes of its Exchange Act reporting obligations. However, registration statements under the Securities Act (e.g., Form S-3) will not be declared effective and post-effective amendments to registration statements will not be declared effective unless financial statements meeting the requirements of S-X 3-05, 3-14, 8-04 and 8-06 or S-X 6-11 (as applicable) are provided.
For example, the Item 9.01 grace period would provide 71 additional calendar days to file a Form 8-K with the financial statements and pro forma financial information relating to an acquired business that is greater than 50% significant, but the grace period provided by S-X 3-05(b)(4)(i) would not extend to the financial statements of a greater than 50% significant acquired business. Accordingly, even though the registrant in this example would be considered current for purposes of its Exchange Act reporting obligations, a new or amended registration statement on Form S-3 could not be declared effective without the financial statements and associated pro forma financial information of the recently acquired business that is greater than 50% significant. See SEC FRM 2050.4 and 2050.5.
See the Instruction to Item 9.01 of Form 8-K and SEC 4550.2221 for additional information (including information relating to the interaction between the Item 9.01 extension and the requirements associated with offerings made pursuant to effective registration statements or pursuant to Rule 506 of Regulation D).
The Item 9.01 grace period and the grace periods provided in S-X 3-05 and 3-14 also differ with respect to the periods of time that are specified.
The period of time referred to in the Item 9.01 grace period is 71 calendar days following the 4th business day after the completion of the acquisition. The period of time referred to in the S-X 3-05 and 3-14 grace periods is no more than 74 calendar days after the acquisition was consummated. The SEC staff has recognized this distinction and has indicated that they will consider the Item 9.01 grace period to be substantially the same as the S-X 3-05 and 3-14 grace periods. See Note to SEC FRM 2050.1.
.26 How are the age of financial statements requirements relating to an acquired business or a real estate operation determined under Item 9.01 of Form 8-K?
For purposes of complying with Item 9.01 of Form 8-K, the required age of an acquired business’s/real estate operation’s financial statements is generally determined by reference to the filing date of the Form 8-K initially reporting the acquisition (see an exception to this general approach below). This date is referred to as the Item 9.01 reference date. If the acquirer did not file a Form 8-K within the four-business day deadline, the fourth business day after the acquisition is the Item 9.01 reference date. In connection with an acquired business/real estate operation that is not a foreign business (as defined in S-X 1-02(l)):
- If the Item 9.01 reference date for determining the age of financial statements in the Form 8-K for an acquired business/real estate operation that is a non-accelerated filer is 90 days or more after the acquired business’s/real estate operation’s year-end (60 days or more for a large accelerated filer and 75 days or more for an accelerated filer), the audited historical financial statements for its most recently completed fiscal year would be required.
- If the Item 9.01 reference date for determining the age of financial statements in the Form 8-K for an acquired business/real estate operation that is a non-accelerated filer is 135 days or more after the date of the most recent audited balance sheet included in the Form 8-K (130 days or more for a large accelerated filer or an accelerated filer), unaudited financial statements must be included as of a date within 135 days (130 days for a large accelerated filer or an accelerated filer) of the reference date (although the financial statements would not have to be updated beyond the quarter-end immediately preceding the acquisition).
In connection with an acquired business/real estate operation that is a foreign business (as defined in S-X 1-02(l)) or a foreign private issuer (as defined in Exchange Act Rule 3b-4), annual audited financial statements will be required for the acquired foreign business's most recently completed year if the Item 9.01 reference date is more than three months after the acquired foreign business's fiscal year-end. Unaudited interim financial statements are required if the Item 9.01 reference date is more than nine months after the end of the acquired foreign business's most recently completed fiscal year. The interim financial statements must cover at least the first six months of the year.
See SEC FRM 2045.14-.15.
SEC FRM 2045.17 describes an exception to the general approach described above relating to a situation in which (i) the effective date of a registration statement occurs after filing the initial Form 8-K reporting the acquisition, but during the Item 9.01 grace period, and (ii) the acquired business is significant. In that case, the SEC staff has indicated that the age of the acquired business’s financial statements presented in the Form 8-K should be based on the effective date of the registration statement. This may result in the registrant providing more recent financial statements for the acquired business, but the due date of the Item 9.01 Form 8-K does not change. See SEC FRM 2045.17.
[Editor’s note: If a registration statement becomes effective after the acquired business’s/real estate operation’s financial statements are filed under Item 9.01 of Form 8-K, the acquired company's financial statements may need to be updated beyond the date of the financial statements that were included in the amended Form 8-K. This is because the effective date of the registration statement creates a new reference date for purposes of evaluating the age of financial statements requirements. See SEC 4550.4.]
.261 Are financial statements required under Item 9.01 if they have been previously filed?
General Instruction B.3 of Form 8-K generally provides that a registrant is not required to file an additional Form 8-K if it has previously reported substantially the same information as required by Form 8-K. In this context, the term “previously reported” is defined in Exchange Act Rule 12b-2.
The SEC staff has provided three examples of situations in which previously filed financial statements of an acquired business will not be deemed "substantially the same" pursuant to General Instruction B.3 to Form 8-K. See SEC FRM 2045.16.
.262 Will the SEC staff consider waiving the financial statement requirements in Item 9.01 of Form 8-K?
The SEC staff will consider a waiver request relating to the financial statement requirements under Item 9.01 of Form 8-K when the registrant believes that strict application of the form requirements produces anomalous results. In determining whether to grant a waiver, the SEC staff will consider the company’s specific facts and circumstances.
[Editor’s note: When a waiver will be requested, it is prudent that the buyer and the seller and their respective professional advisors have an understanding of the content of the waiver request. In some circumstances, it may be prudent to have this understanding be a part of the merger or acquisition agreement.]
FRR 18 discusses SEC staff administrative procedures in circumstances when no waiver is granted, and the required financial statements are not supplied in the time prescribed.
Where a waiver is not granted and the required financial statements are not supplied in the time prescribed, the deficiency will affect the registrant for both Exchange Act and Securities Act purposes. The registrant would not be considered timely or current in its Exchange Act reporting obligations and, where appropriate, enforcement action would be taken. Because of the Exchange Act deficiency, resales in reliance on Rule 144 by either affiliates or non-affiliates would not be possible. In addition, no registration statements would be declared effective and sales pursuant to effective registration statements should not be made in the absence of adequate information about material acquisitions. Once registrants have furnished certified financial statements of the new combined entity for an appropriate period, they could, in some cases, be considered current for Exchange Act purposes and could register securities under the Securities Act. |
See SAB Topic 1-K for the SEC staff’s views regarding the application of S-X 3-05 and S-X 11-01 and the availability of waivers of certain financial statement requirements with respect to troubled financial institutions acquired or to be acquired.
.263 Should a company file an Item 2.01 Form 8-K even when the SEC staff has granted a waiver to omit the financial statements of a significant acquired business that are otherwise required under Item 9.01 of Form 8-K?
The SEC staff has indicated that companies generally should file an Item 2.01 Form 8-K even when the SEC staff has granted a waiver of the requirement to file the financial statements of the acquired business otherwise required by Item 9.01 of Form 8-K. The Item 2.01 Form 8-K would indicate that the financial statement requirements were waived. See Topic H from the March 2019 CAQ SEC Regulations Committee Meeting Highlights.
.3 Changes in registrant’s certifying accountant (Item 4.01)
The disclosure requirements of Item 4.01 of Form 8-K are discussed in SEC 6150.
.4 Non-reliance on previously issued financial statements or a related audit report or completed interim review report (Item 4.02)
.41 What events trigger a requirement to file an Item 4.02 Form 8-K and what are the associated disclosure requirements?
Disclosure is required under Item 4.02 if either of the following triggering events has occurred:
(a) the registrant's board of directors, a committee of the board of directors, or the officer or officers of the registrant authorized to take such action (if board action is not required) concludes that any previously issued financial statements covering one or more years or interim periods for which the registrant is required to provide financial statements under Regulation S-X should no longer be relied upon because of an error in such financial statements; or
(b) the registrant is advised by (or receives notice from) its independent accountant that disclosure should be made or action should be taken to prevent future reliance on a previously issued audit report or completed interim review (even if a review report was not issued) related to previously issued financial statements.
See Item 4.02 of Form 8-K for the specific disclosure requirements.
[Editor’s note: As noted below, reporting under Item 4.02(b) is rare. However, if reporting under Item 4.02(b) is required, then the registrant is required to request the independent accountant to provide the registrant with a letter addressed to the SEC stating whether the independent accountant agrees with the statements made by the registrant in response to Item 4.02 and, if not, stating the respects in which it does not agree. The registrant would file this letter as Exhibit 7 to the Item 4.02 Form 8-K. See Item 4.02(c) of Form 8-K and S-K 601(b)(7).]
[Editor’s note: A PCAOB registered firm is required to notify the PCAOB when it has withdrawn an audit report on an issuer's financial statements, or withdrawn its consent to the use of its name in a report, document, or written communication containing an issuer's financial statements, and the issuer has failed to comply with an SEC requirement to make a report concerning the matter pursuant to Item 4.02 of Form 8-K. The notification is made by submitting a Special Report on Form 3 to the PCAOB. The disclosure on Form 3 will be publicly available on the PCAOB website. General Instruction 3 to Form 3 generally requires disclosure within 30 days after the occurrence of the event being reported. The note to Item 3.1 of Form 3 states that "[t]he 30-day period in which the Firm must report the event does not begin to run unless and until the issuer fails to report on Form 8-K within the time required by the Commission's rules. The Form 3 must be submitted to the PCAOB within 30 days of the expiration of the required Form 8-K filing deadline, unless, within that 30-day period, the issuer reports on a late-filed Form 8-K." (italics omitted) See Special Report on Form 3 (Items 2.1 and 3.1).]
.411 Do all revisions to previously issued financial statements trigger a requirement to file an Item 4.02 Form 8-K?
We do not believe all revisions to previously issued financial statements trigger a reporting requirement under Item 4.02. There are many reasons why a registrant may conclude that its previously issued financial statements need to be revised that do not trigger a requirement to file an Item 4.02 Form 8-K. For instance, a registrant may conclude that it needs to revise previously issued financial statements as a result of a specific event or circumstance which requires retrospective adjustment (e.g., discontinued operations, reorganization of entities under common control, changes in reportable segments and retrospective changes in accounting principles). The circumstances surrounding these types of revisions to previously issued financial statements generally do not trigger an Item 4.02 reporting requirement.
Additionally, we do not believe that a revision to previously issued financial statements to correct immaterial misstatements, either individually or in the aggregate, would generally trigger a reporting requirement under Item 4.02. For example, consider a situation in which a misstatement was discovered in 2023, but that misstatement had accumulated over several years. Assume that the misstatement was determined to be immaterial to each prior period, but that the cumulative amount of the misstatement would be material to the full 2023 fiscal year estimated net income if it were recorded in 2023. In this fact pattern, the correction of the cumulative misstatement cannot be recorded in 2023 as an "out-of-period" adjustment; rather, the previously issued financial statements will need to be revised. The requirements of SAB 108 (SAB Topic 1-N) related to the assessment of materiality should be considered in this case.
In this scenario, we do not believe that the correction of the previously issued financial statements would automatically result in the conclusion that those financial statements or the associated audit reports or completed interim reviews should not be relied on (even if the revised financial statements reflect the disclosures specified for correction of a misstatement by SEC rules and financial accounting guidance). In this example, the revision of the prior periods’ financial statements was not the result of a conclusion that those previously issued financial statements were materially misstated. Instead, those previously issued financial statements were revised because the correction of the cumulative misstatement as an "out-of-period" adjustment in 2023 would have caused the 2023 financial statements to be materially misstated.
[Editor’s note: Registrants should also consider the implications of any applicable compensation clawback requirements (e.g., policies adopted in connection with any exchange listing requirements adopted in response to Exchange Act Rule 10D-1). There may be situations in which an error correction would not require the filing of an Item 4.02 Form 8-K, yet an incentive compensation clawback analysis would be triggered.]
.42 Is reporting under Item 4.02(b) of Form 8-K required each time a registrant reports under Item 4.02(a)?
We do not believe reporting under Item 4.02(b) is required each time a registrant reports under Item 4.02(a). Exchange Act Form 8-K CDI 115.01 indicates that if a registrant has taken appropriate action to prevent reliance on the financial statements and filed an Item 4.02(a) Form 8-K, then the registrant does not need to file a second Form 8-K under Item 4.02(b) to indicate that the auditor has also concluded that future reliance should not be placed on its report, unless the auditor’s conclusion relates to an error or matter different from the original filing under Item 4.02(a) of Form 8-K.
As a general matter, we believe that the independent accountant does not conclude that financial statements require restatement before the registrant has had the opportunity to complete its analysis of the facts, circumstances, relevant accounting literature, and materiality. However, if the independent accountant’s communication to the registrant expresses a conclusion that the previously issued financial statements require restatement to correct a material misstatement, or that disclosure should be made or action should be taken to prevent future reliance on a previously issued audit report or completed interim review (relating to previously issued financial statements), reporting under Item 4.02(b) of Form 8-K would generally be required.
We believe an Item 4.02(b) Form 8-K reporting obligation would not be triggered if the independent accountant communicates to the registrant that an area of concern with respect to previously issued financial statements has been identified and that the registrant needs to investigate or reconsider its accounting or financial reporting.
Additionally, we believe that notification under PCAOB AS 2905 is not necessarily required when the registrant has already concluded that the financial statements should not be relied on, has made public disclosures to prevent future reliance on the financial statements in question, and has reported under Item 4.02(a) of Form 8-K.
We expect that reporting under Item 4.02(b) of Form 8-K will be rare. We believe filings under Item 4.02(b) of Form 8-K should generally be reserved for the limited circumstances when the independent accountant has concluded that its audit report or completed interim review should no longer be relied on, but the registrant has either reached a different conclusion regarding the underlying financial statements or has not taken the appropriate action.
We have discussed these matters with staff members of the SEC’s Division of Corporation Finance. In determining whether a filing is required under Item 4.02(b) of Form 8-K, they acknowledged that an independent accountant advising a registrant to consider whether matters coming to the independent accountant’s attention require revision to previously issued financial statements is different from notifying the registrant that the auditor has concluded that steps should be taken to prevent future reliance on the auditor's report (or completed interim review). The SEC staff indicated that it does not believe that an Item 4.02(b) Form 8-K is triggered by the former. However, they emphasized that filing under Item 4.02(a) of Form 8-K without also filing under Item 4.02(b) of Form 8-K would be acceptable only if the registrant made the requisite disclosures required by PCAOB AS 2905 without the independent accountant first concluding and notifying/advising the registrant that its previously issued audit report (or completed interim review) should no longer be relied upon.
.43 Does a conclusion that a previously issued assessment/report relating to the effectiveness of internal control over financial reporting should no longer be relied upon trigger a requirement to file an Item 4.02 Form 8-K when there has been no conclusion that previously issued financial statements should no longer be relied upon?
Generally, no. We understand that disclosure under Item 4.02 of Form 8-K relates solely to conclusions regarding non-reliance on previously issued financial statements due to a material misstatement. However, public reporting of the situation may, nonetheless, be required (e.g., to notify people relying on the disclosures). We believe registrants should discuss these situations with legal counsel and consider if investors should be informed that the previously issued management’s assessment/report relating to the effectiveness of internal control over financial reporting should no longer be relied upon. Auditors also consider their responsibilities under the relevant professional literature.
.9 FREQUENTLY ASKED QUESTIONS
.901 May a registrant file a Form 12b-25 (Notification of Late Filing) to extend the due date of Form 8-K?
.902 Could filing a Form 8-K after the due date impact a registrant’s eligibility to file a new Form S-3?
Perhaps. One of the eligibility criteria for filing a Form S-3 is that during the 12 months prior to filing the Form S-3, the registrant must have timely filed all reports required to be filed under Exchange Act Section 13(a) or 15(d) other than a report that is required solely pursuant to Item 1.01, 1.02, 1.04, 2.03, 2.04, 2.05, 2.06, 4.02(a) or 5.02(e) of Form 8-K. See General Instruction I.A.3(b) of Form S-3.
[Editor’s note: The above discussion is solely focused on the timely filing aspect of the Form S-3 eligibility requirements. The registrant must have filed all required disclosures on or before the date it files the Form S-3 to satisfy the eligibility requirements of General Instruction I.A.3(b) of Form S-3.]
.903 If a Form 8-K triggering event occurs within four business days before a registrant files a Form 10-K or Form 10-Q, may the registrant report the event in that Form 10-K or Form 10-Q rather than Form 8-K?
In many cases, yes. However, the SEC staff has indicated that this would not be acceptable in the case of a disclosure required under Items 4.01 or 4.02 of Form 8-K. All Item 4.01 and Item 4.02 events must be reported on Form 8-K. See Exchange Act Form 8-K CDI 101.01.
For example, if an Item 1.02 Form 8-K triggering event occurred on March 8, 2023 and the registrant planned to file its Form 10-K for the year ended December 31, 2022 on March 13, 2023, the registrant could disclose the event under Item 9B of that Form 10-K rather than filing a separate Form 8-K. However, if the triggering event were an event requiring disclosure under either Item 4.01 or Item 4.02 of Form 8-K, the disclosure would need to be provided in a Form 8-K. Disclosure in a Form 10-K to be filed by March 13, 2023 relating to an Item 4.01 or 4.02 triggering event would not suffice.
(1) In addition to the Form 8-K Compliance & Disclosure Interpretations relating to the individual Form 8-K items, section 101 of that document contains general guidance.
(2) These items apply only to asset-backed securities. See General Instruction G of Form 8-K for additional information relating to asset-backed issuers.
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