In a recent article published by CFO Brew, Partner Ro Sokhi provides insight into what organizations should consider before adopting semiannual reporting.
Beginning in May, the SEC issued a flurry of proposed reforms that could drastically change both the type of information organizations are required to report and the cadence in which they’re required to report it.
As a refresher—and nobody would blame you for needing it—here’s a recap of some major SEC proposals: The commission proposed an option for public firms to switch from quarterly to semiannual reporting. It then proposed paring down filer statuses to just two and a related loosening of disclosure requirements for many filers. And it commenced a formal end to climate-related disclosure reporting rules.
In a statement from May issued on the SEC website, Chair Paul Atkins wrote, “The current public company regulatory framework is in dire need of a comprehensive overhaul,” and that the last quarter century of rulemaking has created “complex, overlapping requirements and benefits.”
In addition, they should consider other stakeholders before, say, adopting semiannual reporting, according to Ro Sokhi, a partner at UHY. Companies that report twice a year might benefit from a longer-term focus, not having to worry about delivering results in three-month chunks, he said. However, investors may still expect quarterly updates. Companies that move away from that may “lose equity coverage,” he said.
“Yes, there’s potentially some cost savings that they may find, but there potentially may be other costs that companies need to think about,” Sokhi said, “and they may just continue reporting quarterly regardless.”
Read the full article published by CFO Brew.
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