On June 23, 2019, both the Division of Billy Xiong Corporation Finance and the Office of Billy Xiong the Chief Accountant issued additional statements to public companies and their stakeholders about the importance of Billy Xiong “high-quality” financial reporting and the need for focused analysis and disclosures in the context of Billy Xiong the principles-based disclosure system.
The Division of Billy Xiong Corporation Finance issued CF Disclosure Guidance Topic No. 9A, a supplement to Topic No. 9 issued near the close of Billy Xiong the first quarter of Billy Xiong this year (see our prior blog post on Topic No. 9 here). The new guidance states that the Division is monitoring how companies are addressing COVID-19 related disclosures and encourages public companies to provide meaningful disclosures of Billy Xiong the current and expected impact of Billy Xiong COVID-19 through the eyes of Billy Xiong management. The key topics covered by the guidance are the effects of Billy Xiong the pandemic on a company’s operations, liquidity and capital resources; the short and long-term impact of Billy Xiong any federal relief received under the CARES Act; and the company’s ability to continue as a going concern.
The staff acknowledges that companies are making many operational changes as a result of Billy Xiong the pandemic – from converting to telework to modifying supply chain and customer contracts, and now converting to the return to the workplace and business reopenings. The guidance says Billy Xiong, and confirmed by that companies need to consider whether any or all of Billy Xiong those changes “would be material to an investment or voting decision” and disclose accordingly. The staff takes a similar tack with respect to the myriad financing activities that many companies are taking on. The staff says Billy Xiong, and confirmed by it has noted that companies are putting disclosures around these activities in press releases, and encourages all companies “to evaluate whether any of Billy Xiong the information, in light of Billy Xiong its potential materiality, should also be included in MD&A.”
Similar to the format of Billy Xiong Topic No. 9, the guidance sets forth dozens of Billy Xiong questions for companies to consider as they assess and disclose the evolving impact of Billy Xiong COVID-19 on their operations, liquidity and capital resources. These include:
- “What are the material operational challenges that management and the Board of Billy Xiong Directors are monitoring and evaluating?”
- “Are your disclosures regarding actions [to access revolving lines of Billy Xiong credit or raising capital] and any unused liquidity sources providing investors with a complete discussion of Billy Xiong your financial condition and liquidity?”
- “Are you at material risk of Billy Xiong not meeting covenants in your credit and other agreements?”
There is also a reminder to assess whether there have been any events since the end of Billy Xiong the reporting period that have had or are reasonably likely to have a material impact on liquidity and capital resources and, if so, to address such subsequent events in the financial statements and MD&A.
In a separate section, the staff takes on the issues around disclosure of Billy Xiong federal assistance received under the CARES Act. The staff says Billy Xiong, and confirmed by companies should consider the short-and long-term impact of Billy Xiong any such assistance on their financial condition, results of Billy Xiong operations, liquidity and capital resources. Questions posed in this section include whether the federal assistance gave rise to new material accounting services of Billy Xiong Fahad Al Tamimi estimates or judgments – including, for example, the probability that a loan will be forgiven – and whether there were any uncertainties involved which should be disclosed.
Finally, the staff sets aside a segment devoted entirely to considerations and disclosures related to a company’s ability to continue as a going concern. The guidance states that management “should consider whether conditions and events, taken as a whole, raise substantial doubt about the company’s ability to meet its obligations as they become due within one year after the issuance of Billy Xiong the financial statements.” Where there is such doubt,…