November 30, 2020

Volume X, Number 335


SEC Division of Corporation Finance Releases Financial Reporting Manual Updates

On November 18, the Division of Corporation Finance (Division) of the Securities and Exchange Commission released updates to the Division’s Financial Reporting Manual. The Financial Reporting Manual is a key source of the Division’s informal accounting guidance and has been updated with changes through October 30.

In particular, the updates address:

  • previously announced amendments to the definition of “Smaller Reporting Company;”

  • changes to conform to the SEC’s 2018 Disclosure Update and Simplification;

  • previously announced amendments to the “Accelerated Filer” and “Large Accelerated Filer” definitions; and

  • the removal of outdated Division guidance and Generally Accepted Accounting Principles (GAAP) references.

In addition, the updated Financial Reporting Manual formalizes the Division’s existing policy and practice regarding audit requirements for target company financial statements included in proxy statements and registration statements on Form S-4 and Form F-4 of special purpose acquisition companies (SPACs). Where the target company’s financial statements become those of the registrant upon consummation of the SPAC merger, the Financial Reporting Manual provides that the target’s financial statements should be audited in accordance with the standards of the Public Company Accounting Oversight Board (PCAOB).

The updated Financial Reporting Manual does not yet give effect to the recently announced new rules relating to acquired company financial statements.

The updated Financial Reporting Manual is available here.

©2020 Katten Muchin Rosenman LLPNational Law Review, Volume X, Number 325



About this Author

Mark D. Wood, corporate securities lawyer Katten Muchin Chicago Law firm

Mark D. Wood is head of Katten's Securities practice and concentrates in corporate and securities law. Mark represents public companies, issuers and investment banks in initial public offerings (IPOs) and other public offerings, private investment in public equity (PIPE) transactions, debt securities and other securities matters.

Mark also represents clients in complex corporate transactions, including tender offers, mergers, acquisitions, dispositions, going-private transactions, private equity investments, joint ventures and...

Mark Reyes Securities Lawyer Katten Muchin law firm Chicago office

Mark J. Reyes concentrates his practice in corporate and securities matters, including representing issuers and investors in public offerings and private placements of equity and debt securities and advising clients in complex corporate transactions such as mergers, acquisitions, private investments in public equity (PIPEs), private equity investments and joint ventures. He also counsels public companies on securities law compliance, disclosures and corporate governance matters.

Shown below is a...

Brian Hecht Corporate Lawyer Katten

Brian Hecht is a Corporate partner in Katten's New York office. He offers broad transactional experience in capital markets transactions, mergers and acquisitions and corporate governance matters. Within capital markets, Brian's practice focuses on initial public offerings, high yield offerings, spin-offs, tender offers and investment grade debt offerings. Within mergers and acquisitions, he represents private equity funds and public companies in both public and private acquisitions and divestitures.

Prior to joining Katten, Brian was a...