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More Thoughts About Comment Letters
Friday, January 20, 2017

You may wonder about the hip, edgy podcasts that we here at Calcbench follow, because we are so hip and edgy ourselves. Well, one that we sometimes enjoy is the CFO Direct podcast from PwC, which airs roughly once a month to talk about of-the-moment reporting issues.

Yes, we’re just that cool.

The most recent podcast examines trends in 2016 comment letters from the SEC. As you prepare your annual filings for later this spring, or if you want ideas on what topics you may want to research through the Calcbench databases, this one is worth a listen.

One of the speakers, Wayne Carnall (former chief accountant at the SEC, now partner with PwC), noted that lots of comment letters recently focus on complex matters of judgment. For example, you may want to include a non-GAAP performance metric in your filing, and you calculate that non-GAAP metric by excluding a few items. That idea can be acceptable, Carnall said, but if your metric eliminates some expenses that are necessary for your business to function—well, that non-GAAP metric won’t pass the smell test with SEC staff.

Or you might want to change your presentation of non-GAAP metrics from one filing period to another. Is that appropriate? The answer depends on how much of an explanation you give about why the change in presentation makes sense, Carnall said. If a company is changing its presentation simply to make its performance look better, a comment letter might be in your future.

We mention all this because Calcbench does let you research and track SEC comment letters. You can see one previous post on how to find comment letters; and another on the wisdom of following your peers’ and competitors’ comment letters, to gauge whether any reporting practices you’re following might get a comment letter too. And you can see a whole other post about forming a peer group as well.

Meanwhile, we’re going back to listening to this podcast about comment letter trends. Stay hip, people.


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