Filing With the SEC? Knowing Comment Trends Would Help

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By Xing Gao

Foreign private issuers should pay close attention to Securities and Exchange Commission comment letter trends dealing with disclosure compliance, according to Mark Bergman, a Paul, Weiss, Rifkind, Wharton & Garrison LLP partner.

Knowing the common disclosure deficiencies and where SEC inspection is focusing would help foreign issuers improve their disclosures and resolve any issues with the SEC.

SEC comment letters are based on a company’s disclosures and other public information. A comment letter may indicate a deficiency in a company’s disclosures or an error in the company’s accounting. The topics that the SEC most frequently comments on are very similar for both foreign and domestic companies, according to SEC Deputy Chief Accountant Craig Olinger.

Olinger and Bergman spoke at a panel at the American Institute of CPA’s annual conference on current SEC and PCAOB developments, Dec. 6 in Washington.

Non-GAAP measures, management discussion and analysis (MD&A), fair value, segment reporting, revenue recognition, and business combinations are the topics at the top of the list. However, “you may see more comments for foreign issuers on issues related to the international financial reporting standards presentation,” Olinger said.

The first year of filing annual reports with the SEC “was all about getting it done,” according to Fiat Chrysler Automobiles NV controller Jon Nelson, also speaking at the conference. “The second year was about stabilizing. And then the third year we started to think about getting more efficient.”

Bergman said that foreign issuers should use the comment letter process to take a fresh look at what they need to disclose in order to better prepare their annual reports and disclosures.

U.S. Market Still Attractive

Despite the regulatory challenges, Nelson said that the U.S. is still a very attractive market for foreign companies.

“The research and development and other resources are still attractive,” Nelson said. “It was easier for us to find accounting professionals with sufficient IFRS knowledge in Detroit than finding people with U.S. GAAP knowledge in other countries.”

Olinger went on to say that one of the goals for the SEC’s Division of Corporation Finance is to encourage more foreign private issuers to come to the U.S.

To contact the reporter on this story: Xing Gao in Washington at

To contact the editor responsible for this story: S. Ali Sartipzadeh at

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