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LBB BRIEFS for Smaller Reporting Companies, SEPTEMBER 2012

03 Oct

This information comes from the LBB & Associates Ltd., LLP September 2012 newsletter, reprinted here with permission. This information is focused on issuers and issues that they will encounter.


SEC Comments – Most Frequent Comment Areas

In looking at the frequent staff comment areas over the past year, many are familiar topics and some represent implementation related issues for relatively new standards. The following are the most frequent comment areas:

  • Loss contingencies – disclosures often inadequate;
  • Income taxes – very complex, #1 cause of financial statement restatements;
  • Segments and related disclosures;
  • Goodwill and intangibles impairment;
  • Securities – Fair Value and OTTI (other-than-temporary-impairment);
  • Disclosure considerations
    • Non-GAAP measures – cash flow per share will definitely draw staff’s attention
    • Proforma financial information

Disclosure focus – Liquidity & Capital Resources

Consider the following partial list of guidelines in getting the most out of your company’s liquidity & capital resource disclosure:

  • Avoid rote recitation of the actual statement of cash flows;
  • Disclose primary drivers of cash flows and the reasons for changes underlying major captions in financial statements;
  • Disclose significant debt instruments, guarantees, and covenants;
  • Consider a table of contractual obligations, loss contingencies, and cash requirements;
  • Disclose significant subsequent events;
  • Disclose liquidity implication of overseas cash balances;
  • Disclose borrowing activity to fund significant share repurchases or other discretionary investing and financing activities.

Indefinite-lived intangibles – qualitative assessment now available

This quarter, the FASB finalized a standard intended to reduce the cost and complexity of the annual impairment test for indefinite-lived intangible assets. The guidance may look familiar-it’s similar to the revised goodwill impairment test issued last year. Both allow companies to perform an elective qualitative assessment to determine whether further impairment testing is necessary.

Early adoption permitted this quarter

The standard is effective for fiscal years beginning after September 15, 2012. Early adoption is permitted as long as financial statements have not yet been issued for the period that covers the annual assessment. That means, for example, a calendar year-end company with a third quarter annual test date can use the qualitative assessment this year.

LBB & Associates Ltd., LLP is an AICPA, PCAOB, and CPAB registered public accounting firm with a concentration in audits of smaller reporting companies.  LBB is also active in SEC reporting consulting and acquisition due diligence efforts with smaller reporting companies.  Past issues of our newsletter can be found at www.LBBCPA.com.

LBB & ASSOCIATES LTD., LLP, HOUSTON, TX 713-800-4343


© 2012 by LBB & Associates Ltd., LLP with portions © by Rhodes Holdings LLC.

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Posted by on October 3, 2012 in BLOG, Business, Public markets

 

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