On August 25, 2016, the SEC’s Division of Corporation Finance (“Corp Fin”) updated its Financial Reporting Manual by making the following changes:

  • Adding a new section describing communications with Corp Fin’s Office of Chief Accountant (“CF-OCA”).
  • Clarifying that questions regarding the application of guidance on abbreviated financial statements to a predecessor entity should be directed to the CF-OCA (Section 2065).
  • Making corresponding changes in light of the Compliance and Disclosure Interpretations (“C&DIs”) relating to the omission of financial information from draft and filed registration statements (Sections 10220.1 and 10220.5).
    • The updates to Section 10220.1 refer to recently issued Securities Act C&DI Question 101.4 and note that Securities Act C&DI Question 101.05 addresses similar matters for non-EGC issuers. Question 101.04 clarifies that an EGC may omit from its draft registration statements interim financial information that it reasonably believes it will not be required to present separately at the time of the contemplated offering. Question 101.05 clarifies that an issuer that is not an EGC may omit from its draft registration statements interim and annual financial information that it reasonably believes it will not be required to present separately at the time it files its registration statement publicly. For more information regarding Questions 101.01 and 101.05, see our prior blog post.
    • The updates in Section 10220.5 refer to FAST Act C&DI Question 2, which clarifies that an EGC may omit financial statements of other entities from its filing or submission if it reasonably believes that those financial statements will not be required at the time of the offering.

The updates to the Financial Reporting Manual are available here.