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The SEC’s Division of Corporation Finance (Corp Fin)
released a long-awaited update to its Financial Reporting Manual (FRM) in late
January. The updates are effective as of Dec. 31, 2022, and address
several matters. This is the first update to the FRM since November
2020.
Originally developed as a collection of internal staff
guidance, the FRM was first published on the SEC website in 2008. Although the SEC is careful to
note that the FRM is intended to serve as a collection of informal,
non-authoritative guidance, it serves for many as a key resource
for how the agency analyzes important issues involving accounting
and disclosure conclusions.
Unfortunately, Corp Fin staff did not provide hoped-for updates
to existing guidance on financial statements for acquired
businesses (i.e., the significance tests in Rule 3-05 of
Regulation S-X, which generally requires separate audited annual,
and unaudited interim, pre-acquisition financial statements of an
acquired or to-be-acquired business). Nevertheless, the updates are
important, particularly for companies with financial
guarantors.
Below, you’ll find a bird’s-eye view of the updated
topics helpfully hyperlinked to the relevant portion of the FRM,
and here you will find our changed-page-only
redline of the modifications from the staff’s prior update.
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Topic/Section
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Comment
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Updates the contact information for Corp Fin’s Chief
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1430,
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Reflects the amendments to Rules 3-10 and 3-16 and addition of
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Updates the Emerging Growth Company (EGC) revenue threshold
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Clarifies the implementation date of Accounting Standards Update
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Removes certain outdated information, such as guidance on the
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The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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