Heads Up
Audit and Enterprise Risk Services
June 12, 2008
Vol. 15, Issue 24
Something to Talk About
SEC Staff Explains the Filing Review and Comment
Letter Process
by Nedra Downing and Beth Ann Reese, Deloitte & Touche LLP
“A company should
not hesitate to
request that the
staff reconsider a
comment it has
issued or reconsider
a staff member’s
view of the
company’s response
to a comment at any
point in the filing
review process.”
The staff of the SEC’s Division of Corporation Finance (“the Division”) recently issued
an overview that explains its filing review and comment letter process. At the 2007 AICPA
National Conference on SEC and PCAOB Developments, Mr. Wayne Carnall, then the
Division’s new chief accountant, indicated that one of his highest priorities would be to
help make interactions with the Division as efficient and effective as possible, including
encouraging better communication among companies, auditors, and the Division staff. The
overview helps accomplish that goal by providing more transparency in the review process
and expressing the Division’s willingness to discuss issues with companies. For example,
the overview indicates that the “Division views the comment process as a dialogue with
a company about its disclosure” and that a “company should not hesitate to request that
the staff reconsider a comment it has issued or reconsider a staff member’s view of the
company’s response to a comment at any point in the filing review process.”
The overview is divided into two main sections:
• The Filing Review Process — This section explains that the Division comprises eleven
offices staffed by experts in specialized industries, accounting, and disclosures. The
section includes background on the different types (required and selective) and levels
of review and covers the comment process, indicating that “[m]uch of the Division’s
review [process] involves reviewing the disclosure from a potential investor’s perspective
and asking questions that an investor might ask when reading the document.” The
section also addresses how to respond to SEC staff comments and close a filing review.
• The Reconsideration Process — This section emphasizes that “Division staff
members, at all levels, are available to discuss disclosure and financial statement
presentation matters with a company and its legal, accounting, and other advisors.”
In addressing companies’ potential requests for reconsideration of a staff member’s
comment or view on a company’s response, the staff emphasizes that there is no
formal protocol to follow. However, the staff explains where companies should start
and the steps involved in the normal course of the reconsideration process. The staff
also specifies contact information for each office in the Division for both accounting
and financial disclosure matters and legal and textual disclosure matters.
The overview is available on the SEC’s Web site. The staff has not requested comments
on it.
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