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SEC Officials Want Consistent Non-GAAP Metrics

As companies increase their use of non-GAAP measures, Securities and Exchange Commission (“SEC”) chairman Jay Clayton has urged public companies to provide metrics that are consistent with business operations. The request comes as SEC officials express concern over misleading non-GAAP metrics that cause companies to portray a more favorable financial performance than GAAP metrics do. In turn, the deceiving numbers can drive up stock prices. Discussing the issue at a December 10 conference in Washington, D.C., Clayton called for similar consistency in reporting non-GAAP metrics and key performance indicators as expected in GAAP metrics. SEC chief accountant Wesley Bricker agreed. Read More.

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FASB Proposes Extending Goodwill and Identifiable Intangibles Alternatives to Nonprofits

A recently proposed Accounting Standards Update (“ASU”) aims to help nonprofits account for goodwill and calculate certain identifiable intangible assets. Proposed ASU No. 2018-320, Intangibles-Goodwill and Other (Topic 350), Business Combinations (Topic 805), and Not-for-Profit Entities (Topic 958): Extending the Private Company Accounting Alternatives on Goodwill and Certain Identifiable Intangible Assets to Not-for-Profit Entities, extends an accounting alternative from the Private Company Council that allows nonprofits to amortize goodwill over 10 years or less on a straight-line basis. Nonprofits could also use the accounting alternative to test for impairment upon a triggering event, opt for an impairment test at the. Read More.

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SEC to Publish Concept Release on Exempt Offerings

According to its latest rulemaking agenda, the Securities and Exchange Commission (“SEC”) plans to issue a concept release on exempt offerings. The effort aims to generate feedback on ways the SEC could streamline the exempt offering process, which at the moment is pieced together by a complicated mix of disparate exemptions. SEC staff wants to review how to synchronize and simplify the disparate exemptive rules. William Hinman, the SEC’s Division of Corporation Finance director, said the concept release will be very broad and ask numerous questions concerning private placement exemptions. Part of the broad concept release will include exploring “accredited. Read More.

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Congress Extends Size Computation Period for Revenue Based Size Standards to Five Years

For government contracting purposes, there are two tests for determining whether a concern is a small business, a revenue test and an employee test.  For the revenue test, SBA rules (13 CFR §121.104) have required that a concern’s size status be determined by the average revenue of the concern and all its affiliates for the last three fiscal years of the concern.  This revenue test was based on a section of the Small Business Act, 15 U.S.C. §632, which provides in part that no Federal department or agency may prescribe a size standard for categorizing a business concern as a. Read More.

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SEC Chairman Says FASB Should Decide on Credit Loss Standard Delay

With pressure mounting for the Financial Accounting Standards Board (“FASB”) to postpone implementation of Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, Securities and Exchange Commission (“SEC”) chairman Jay Clayton is tiptoeing around the prospects of a delay. Talking to reporters at a recent conference, Clayton said while his agency oversees standard-setting organizations, it is ultimately up to the FASB to decide whether delaying the credit loss standard is necessary. His remarks come as banks and trade groups have asked for more time to implement ASU No. 2016-13 . Banking groups like the Mortgage Bankers Association and the Bank Policy Institute are concerned over the costs to comply with the standard.. Read More.

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Corp Fin Director Wants Public Companies to Improve Cybersecurity Disclosures

With public companies giving investors more information about cybersecurity risk factors, the director of the Securities and Exchange Commission’s (“SEC”) Division of Corporation Finance believes there is still room for improvement. At a speech last month, William Hinman noted that SEC staff is seeing inconsistencies regarding the quality of cybersecurity disclosures. To resolve the issue, Hinman wants companies to provide more details on how their boards of directors oversee risks and breaches. Hinman’s remarks come as Corp Fin staffers continue to review companies’ cybersecurity disclosures since the SEC issued Release No. 33-10459, Commission Statement on Guidance and Public Company Cybersecurity Disclosures . Issued in February, the guidance stresses why companies must implement controls for. Read More.

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