Actions by the SEC, other federal agencies and the courts continue to change or propose changes to the rules concerning the disclosures that publicly listed companies must make. They are responding to the latest series of U.S. federal laws aimed at improving corporate accountability and enhancing growth in a slow economy. Most recently, a court has vacated the SEC rule on disclosure of payments by resource extraction issuers, and the U.S. Government Accountability Office (GAO) has recommended further disclosures about auditor attestation, as follows:
Disclosures of payments by resource extraction issuers: In July 2013, the U.S. District Court for the District of Columbia vacated the SEC’s Rule 13q-1 (SEC Release No. 34-67717; August 22, 2012), which requires oil, gas, and mining companies to publicly report certain payments made to foreign governments for the extraction of oil, gas, or minerals, beginning with fiscal years ending after September 30, 2013. This reporting was to be done using the SEC’s new Form SD. The SEC had issued the rule to implement Section 1504 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
The suit was brought against the SEC by the American Petroleum Institute and other interested parties, which contended that the Dodd-Frank Act did not require public disclosure to the extent set out under the SEC’s rule. The SEC must now develop a revised rule.
The U.S. Government Accountability Office (GAO) has advised the SEC to require companies to disclose whether they obtained an auditor attestation on their internal controls over financial reporting (ICFR). The advice, provided in the form of a GAO report to the SEC, suggests that such disclosure would enhance transparency and investor protection.
The GAO report notes that small public companies that were permanently exempted from obtaining auditor attestation under the Dodd-Frank Wall Street Reform and Consumer Protection Act have had more financial restatements than nonexempt companies, and the percentage of restatements by exempt companies has exceeded those of nonexempt companies. See “GAO Highlights” of the recommendations here.
STP has recently released an update to SEC Disclosures Checklists and also publishes Securities Law: A Guide to the 1933 and 1934 Acts and their Amendments, including Sarbanes-Oxley and Dodd-Frank.