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ACCOUNTING AND SEC HEADLINES:

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SEC Staff Interpretations – SEC Staff Updates Compliance and Disclosure Interpretations

The staff in the SEC’s Division of Corporation Finance (Corp Fin) has published new edition of the following Compliance and Disclosure Interpretations (CDIs):

• Exchange Act Sections 13(d) and 13(g) and Regulation 13D-G Beneficial Ownership Reporting (new Questions 105.08-105.10, 110.09-110.10);
• Proxy Rules and Schedules 14A/14C (new Question 155.02);
• Regulation Crowdfunding (new Question 202.02); and
• Tender Offer Rules and Schedules (new Questions 104.03 and 131.04).

These CDIs have been updated to provide guidance from Corp Fin on various topics.

E-Delivery – SEC Proposes New E-Delivery Requirements

The SEC proposed Regulation E-Delivery, a new rule that would expand the ability of issuers, broker-dealers, investment advisers, and others to use electronic delivery to satisfy information delivery requirements under the federal securities laws.

Regulation E-Delivery would make information more readily accessible and useful for investors and others while preserving the ability to receive delivery in paper format on request. Currently, required regulatory information typically is delivered in paper format unless the recipient affirmatively elects otherwise. The proposed e-delivery approach includes requirements and conditions under which required information could be delivered electronically without first obtaining affirmative consent. It generally would supersede the Commission’s decades-old, guidance-based e-delivery approach and provide savings to issuers, market intermediaries, and, ultimately, investors, in paper, printing, and postage costs.

The SEC indicates that the “proposal reflects how today’s issuers, market intermediaries, investors, and others use electronic media to provide and access information. E-delivery offers the opportunity to give investors and others potentially more personalized, interactive, timely, and efficient experiences with disclosure than paper delivery. It also provides accessibility and retention benefits. The range of information deliverable electronically under the proposed rule would be broad, including, among other things, prospectuses for funds and other issuers, fund annual and semi-annual shareholder reports, proxy statements, trade confirmations, disclosures pursuant to Form CRS, and Form ADV Part 2 Brochures.”

The proposal includes a transition process for investors and others who are currently receiving regulatory information in paper format. These recipients would receive two paper notices if they would be transitioned to e-delivery under the rule, which would provide information about the upcoming transition and the ability to opt out of e-delivery.

The public comment period will remain open for 60 days following publication of the proposing release in the Federal Register.

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AUDITING AND INTERNAL CONTROL HEADLINES:

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External Confirmations – AICPA Issues SAS 150 Providing Guidance on External Confirmations

The AICPA issued Statement on Auditing Standards (SAS) No. 150, External Confirmations. SAS 150 is applicable when the auditor uses external confirmation procedures to obtain audit evidence. SAS 150 amends:

• SAS No. 122, Statement on Auditing Standards: Clarification and Recodification, as amended,
• Section 330, Performing Audit Procedures in Response to Assessed Risks and Evaluating the Audit Evidence Obtained
• Section 505, External Confirmation
• SAS No. 142, Audit Evidence, as amended
• Various other SASs and other sections in SAS 122, as amended

The most significant change introduced by SAS 150 is a new requirement for the auditor to perform external confirmation procedures for cash and cash equivalents held by third parties (cash) to respond to the assessed risks of material misstatement unless certain conditions exist. Within the language of the new requirement, SAS 150 acknowledges direct access to information maintained by a knowledgeable external source as a means of satisfying requirements related to external confirmation procedures and provides related guidance. SAS 150 also provides amendments to reflect the increasingly widespread use of intermediaries in external confirmation procedures and requires certain new conditions to be met when using negative confirmation requests to address an assessed risk of material misstatement at the assertion level.

SAS 150 becomes effective for audits of financial statements for periods ending on or after December 15, 2028. Early implementation is permitted.

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GOVERNMENT HEADLINES:

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Governmental GAAP Guide – 2027 Edition of Governmental GAAP Guide Published

We have published the 2027 Edition of Governmental GAAP Guide. This publication is written with the recognition that financial professionals who work with state and local governments must stay current with emerging governmental standards or face unfortunate consequences.

This new edition has been updated throughout with the very latest information on the following GASB standards either recently implemented or in the process of being implemented as of the date of this publication:

• GASB-103 (Financial Reporting Model Improvements);
• GASB-104 (Disclosure of Certain Capital Assets); and
• GASB-105 (Subsequent Events).

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