The SEC staff recently issued a report on its review of Regulation S-K, which was required by section 108 of the JOBS Act, the 2012 law that was enacted to increase U.S. job creation and economic growth by improving access to the public capital markets for emerging growth companies. The December 2013 report recommended a comprehensive approach to disclosure reform, with the staff expressing its belief that this would both streamline disclosure requirements for companies and focus on useful and material information for investors. The report’s completion will enable the SEC to take the next step in considering whether disclosure requirements should be revised, which Chair Mary Jo White said the SEC would do in an October speech.
In the report, the SEC staff recommended a plan to systematically review the disclosure requirements in both Regulation S-K and Regulation S-X. Regulation S-K sets forth the disclosure requirements for the content of the non–financial statement portions of an SEC filing. Regulation S-X establishes disclosure requirements related to the form and content of financial statements included in an SEC filing. With respect to the review of the financial statement requirements, the SEC’s press release announcing the report’s publication noted that, in order to improve disclosure, “the SEC’s Office of the Chief Accountant will coordinate with the Financial Accounting Standards Board to identify ways to improve the effectiveness of disclosures in corporate financial statements and to minimize duplication with other existing disclosure requirements.”
According to the staff recommendations, the most recent comprehensive review of the financial reporting requirements of Regulation S-X occurred in the early 1980s as part of the implementation of the integrated disclosure system. The staff indicated that, since that time, many new financial statement disclosure requirements have been adopted that may now be redundant with the SEC’s requirements. It noted that the systematic review could also address the selected financial data disclosure mandated by Item 301 of Regulation S-K and the ratio of earnings to fixed charges mandated by Item 503 of Regulation S-K.