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Corporation Finance Division to Recommend Changes to Disclosure Rules

February 24, 2014

Staffers in the SEC’s Division of Corporation Finance are being asked to update the disclosure rules for public companies. The effort follows the agency’s publication in 2013 of Report on Review of Disclosure Requirements in Regulation S-K. In addition, the plans call for the SEC’s chief accountant to work with the FASB on the possible changes and minimize duplicate requirements.

The staff in the SEC’s Division of Corporation Finance will make specific recommendations this year to update disclosure rules for public companies, SEC Chair Mary Jo White said on February 21, 2014.

In December 2013, the SEC published a long-awaited study on its disclosure rules and the plans to simplify the requirements companies must meet in their regulatory filings.

The Report on Review of Disclosure Requirements in Regulation S-K reached some preliminary conclusions but had few specific recommendations for revising the rules. The SEC published the report to satisfy a request from Congress in the 2012 JOBS Act.

“As part of this effort, Corp Fin will be broadly seeking input from companies and investors about how we can make our disclosure rules work better, and, specifically, investors will be asked what type of information they want, when do they want it, and how companies can most meaningfully present that information,” White said during her speech at the Practising Law Institute’s 2014 SEC Speaks conference in Washington.

“Updating our rules is only one step—albeit an important one—in improving company disclosures,” Keith Higgins, director of the SEC’s Division of Corporation Finance, said at the time the Review of Regulation S-K was issued. “For their part, companies should examine how they can improve the quality and effectiveness of their disclosures and how our rules can be improved to facilitate clear and effective communications to investors.”

The agency said its chief accountant will work with the FASB to identify changes that can be made and minimize duplicate requirements.

The FASB has been working on a project to overhaul disclosures since 2009 and is planning to issue a proposed framework early in 2014 to begin updating the disclosure rules in U.S. GAAP. The accounting standard-setter issued Invitation to Comment, Disclosure Framework, in July 2012 to solicit views from investors, financial executives, auditors, and corporate legal advisers.

The SEC’s effort to reform its disclosure rules picks up from an initiative unveiled by Chief Accountant Paul Beswick in December 2012. Beswick’s effort was ultimately folded into the larger Reg S-K review for the JOBS Act.