Ernst & Young recently issued its annual review of Staff comment letters. The number of comment letters issued during the year ended June 30, 2020 declined by 15% over the prior year. That represents the continuation of a four-year trend that has seen the number of comment letters decline by nearly 2/3rds since 2016.
EY attributes the decline to the Staff’s continued use of a “risk-based” approach to the review process, which involves concentrating on larger filers and reviewing their filings more frequently. Here’s a list of the 10 topics that were most frequently the subject of SEC comments:
Non-GAAP financial measures
Management’s discussion and analysis
Fair value measurements
Intangible assets and goodwill
Inventory and cost of sales
The list is pretty similar to last year’s, although revenue recognition comments led the way in 2019. Contingencies and inventory, as well as cost of sales were the only additions to this year’s top 10 list, while comments on state sponsors of terrorism and acquisitions and business combinations failed to make the cut this year.
-John Jenkins, TheCorporateCounsel.net September 29, 2020
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