As the calendar cycle comes full circle, we once again find ourselves immersed in the SEC filing season. For many businesses, the process of compiling and submitting their annual reports can be a daunting source of stress and anxiety. The meticulous details, complex regulations, and looming deadlines can all contribute to this apprehension.
However, it’s crucial to acknowledge that there exist effective strategies and crucial tips that can streamline this season and reduce stress. In this blog post, we’ll cover some essential tips to help you navigate SEC filing season with ease.
The Securities and Exchange Commission (SEC) holds a pivotal role in overseeing securities markets and safeguarding the interests of investors. As a filer, comprehending the intricacies of filing requirements and procedures is essential to ensure a seamless and stress-free experience throughout the SEC filing season.
Transitioning to electronic filings facilitates public access to information, making it easily searchable on the SEC website. The adoption of electronic filing has proven even more critical amid the challenges posed by the COVID-19 pandemic. It has effectively addressed logistical and operational hurdles, allowing the Commission and filers to navigate disruptive events without the constraints of paper submissions.
Understanding Different Types of SEC Filings
The SEC requires companies to file various forms and reports to ensure transparency and provide investors with accurate and timely information. Understanding the different types of SEC filings is crucial to meet the specific requirements and deadlines associated with each filing.
- Form 10-K: This is the annual report that provides a comprehensive overview of the company’s financial performance, operations, and risks. It includes audited financial statements, management’s discussion and analysis (MD&A), and other relevant disclosures. The deadline for filing Form 10-K is 60 days for large-accelerated filers, 75 for accelerator filers and 90 for non-accelerated filers.
- Form 10-Q: This is the quarterly report that provides an update on the company’s financial condition and results of operations. It includes unaudited financial statements, MD&A, and other required disclosures. The deadline for filing Form 10-Q is 45 days for non-accelerated filer category, whereas it is 40 days for large-accelerated filer and accelerator Filer.
- Form 8-K: This is the current report that companies must file to disclose any material events or corporate changes that may have a significant impact on investors. Examples of events that require an 8-K filing include acquisitions, mergers, changes in management, or financial restatements. The deadline for filing Form 8-K is within four business days of the occurrence of the event.
- Form 4: This is the statement of changes in beneficial ownership that insiders, such as directors, officers, and significant shareholders, must file to report their transactions involving the company’s securities. The deadline for filing Form 4 is within two business days of the transaction.
Understanding these different types of SEC filings will help you prioritize and plan your filing activities to meet the respective deadlines.
Before commencing your annual report, a thorough review of the filing requirements can save time and minimize the potential for errors or omissions.
It is also essential to recognize that public companies may have unique reporting requirements contingent on factors such as size, location, and stock exchange listing. For instance, domestic issuers (U.S.) and foreign issuers are subject to differing regulations when filing their financial statements. This divergence in reporting requirements demands careful consideration.
Also, note that different public companies have distinct reporting requirements based on factors such as size, location, and stock exchange listing. For example, domestic issuers (U.S.) and foreign issuers have different requirements for filing their financial statements.
To avoid the risk of noncompliance, ensure your team follows the filing requirements for your company type and filing categories.
1. Prepare Early
Aim to start the preparation process early to avoid the last-minute rush. Starting the process early gives you ample time to review, make changes, and correct errors before the deadline.
Typically, companies need to file their annual reports within two to three months of the year-end. Therefore, ensure you have an updated calendar of SEC-related filing deadlines for the current year. Additionally, early preparation aids in compiling all the necessary information for the filing, reducing the likelihood of missing critical information.
2. Draft a Checklist
Preparing a checklist of the necessary requirements and documentations for the annual report helps you stay organized and track progress. The list should cover every item required for filing, indicating the items that have been completed and the outstanding work.
Your checklist also needs to indicate the Responsible Person for each item and the planned date of completion for each task. This helps to distribute responsibilities among team members and ensure all tasks are completed on time.
3. Assign Roles and Responsibilities
Assigning roles and responsibilities reduces confusion and ensures every member of your team knows what’s expected of them. Appoint a project manager, team leader, or supervisor to oversee the project’s progress and ensure everyone is on the same page.
The team leader or project manager should lead the team in preparing and filing the report, periodically checking the checklist and communicating with team members about assigned tasks’ status. The team leader’s role encompasses overseeing the project’s progress and ensuring set deadlines are met.
4. Review Prior Year Filing
Before starting the process, reviewing the previous year’s filing helps you identify areas that require more attention and if corrections are needed. With the prior-year filing, check for potential issues such as late filings, incorrect disclosures, omissions, or errors.
Reviewing past filings improves the accuracy and completeness of the current filing. Additionally, reviewing the previous year’s filing helps you identify regulatory changes that may affect your annual report. Your company’s legal counsel may assist you in understanding regulatory changes to ensure that you include any necessary disclosures in your annual report.
5. Work with Auditors
Working with auditors helps you to assess the accuracy of your financial information and ensures its compliance with regulatory requirements. The auditor brings objectivity and specialized expertise and helps identify discrepancies that may be overlooked during internal review.
Before finalizing the report, hire independent auditors to assess the accuracy of the financial information. Auditors review the financial statements to ensure accuracy, consistency and identify any material misstatements. Work with the audit team to understand their assessment, any issues identified, and ensure compliance with the regulatory requirements.
6. Update Disclosures
Ensure your disclosures are updated based on any changes in your company’s operations, business model, financial position, or regulatory environment. Identifying changes in your company requires you to update recent and future disclosures.
Reporting new developments or material changes helps investors, analysts, and other stakeholders understand the company’s financial status, risk management, and performance measures. Ensure that disclosed information complies with SEC requirements and regulations.
7. Have a Review Process
Having a review process helps to enhance the accuracy and completeness of the annual report while reducing the risk of errors and omissions. Assign the review tasks to specific members of the team and set deadlines for reviews.
Internal review processes help ensure the report’s accuracy by incorporating a process to identify, analyses and resolve issues before the filing deadline. Regular reviews ensure that the annual report accurately represents the company, eliminates inconsistencies, and identifies any regulatory compliance risks.
8. Utilize SEC Filing Software
Manually filing the SEC reports can increase the risk of errors and omissions, reducing accuracy. Utilize SEC filing software that offers an efficient method to prepare and file SEC reports. The software saves time and ensures accurate and efficient document generation.
SEC filing software provides a structured approach and embedded formulas to generate complete and accurate reports, reducing the filing process’s time frame. Fortunately, there are several tools and resources available to help streamline the process:
9. SEC Filing Software
Invest in SEC filing software that automates and simplifies the filing process. These software solutions provide templates, workflow management, and document storage capabilities, ensuring accuracy and efficiency. One such SEC filing software is IRIS CARBON® that holds the top spot for filing efficiency and can help you reduce your SEC reporting expenses by 25%.
- Filing Calendars: Utilize filing calendars offered by financial news providers or regulatory compliance firms. These calendars provide a consolidated view of upcoming filing deadlines, helping you stay organized and plan your activities accordingly.
- SEC Website: The SEC’s official website is a valuable resource for staying up to date with filing requirements and deadlines. It provides access to the latest regulations, forms, and guidance documents that can help you navigate the filing process effectively.
- Industry Associations: Join industry associations and professional networks that specialize in finance and accounting. These organizations often provide resources, webinars, and networking opportunities to help members stay informed about regulatory changes and best practices.
- Consulting Services: Consider engaging consulting firms that specialize in SEC filings and compliance like IRIS CARBON®, which offers extensive 24/7 free support and assistance. These firms offer expertise, guidance, and support tailored to your specific needs, ensuring accurate and timely filings.
By leveraging these tools and resources, you can streamline your SEC filing processes and enhance your overall compliance efforts.
Benefits of Electronic Filings
Transitioning to electronic filings offers several benefits for filers, investors, and the SEC. Here are some key advantages:
- Accessibility: Electronic filings make material information readily accessible to investors and the public. Instead of visiting SEC facilities, investors can easily access and search for information on the SEC website.
- Cost and Time Savings: Electronic filings eliminate the need for physical visits to the SEC’s reading room, saving investors both time and money. Processing paper filings also incurs costs and consumes time for the SEC, which can be reduced by transitioning to electronic filings.
- Efficiency and Resilience: Electronic filings improve operational resiliency, particularly during disruptive events like the COVID-19 pandemic. It ensures a smooth and uninterrupted filing process, even when paper submissions are impractical or unavailable.
- Transparency: Electronic filings enhance transparency by enabling the public to access and search for information in easily searchable formats. This promotes accountability and helps investors make informed decisions.
- Modernization: The amendments reflect the SEC’s commitment to modernize the filing process. By requiring structured data reporting and removing outdated references, the SEC aims to streamline operations and keep pace with technological advancements.
To facilitate the transition to electronic filings, the SEC has provided transition periods for filers to prepare and submit documents electronically. Here are the key transition periods:
- Glossy Annual Reports: Filers have six months after the effective date of the amendments to submit their “glossy” annual reports to security holders electronically in accordance with the EDGAR Filer Manual. Paper filers who are transitioning to electronic filing for the first time will also have a six-month period to comply.
- Form 144: The version of the EDGAR Filer Manual addressing updates to Form 144 for electronic filing will be effective six months after its publication in the Federal Register.
- Form 11-K: Filers have three years after the effective date of the amendments to submit the financial statements and accompanying schedules required by Form 11-K in the Inline XBRL structured data language.
These transition periods allow filers to familiarize themselves with the electronic filing process and make necessary adjustments to comply with the new requirements.
Filing Guidance by Filer Type
The SEC provides guidance tailored to specific filer types. Here are some key resources for different filer types:
Asset-Backed Securities Issuers – Asset-backed securities issuers can find staff guidance for EDGAR filings on the SEC’s website. This guidance provides insights and instructions on electronic filing requirements for asset-backed securities issuers.
Broker-Dealers – Broker-dealers can refer to comprehensive guidance from the Division of Trading and Markets. This gateway provides a wealth of information to help broker-dealers understand electronic filing requirements. In addition, there are specific instructions for electronic filing of broker-dealer annual reports, including procedures for obtaining EDGAR access credentials and step-by-step guides to facilitate the filing process.
Investment Companies – Investment companies have access to various resources to guide them through the electronic filing process. These resources include:
- Guidance on co-reg filings with S/C IDs
- FAQs on certified shareholder reports filing
- Mandatory series and class (contract) identifiers requirements
- Instructions for Form CRS
- FAQs on Form ADV and IARD filings
These resources help investment companies understand the specific requirements for filing different forms and reports.
Small Businesses/Entities – Small businesses and entities can access specific guidance on various filing requirements. Some key resources include:
- Filing a Form D notice for exempt offerings
- Mandatory electronic submission of applications for orders under the Investment Company Act
- Compliance guides for amendments to Regulation A and operating company inline XBRL filing
- FAQs on interactive data for financial reporting
These resources provide valuable information to small businesses and entities looking to comply with filing requirements.
Navigating the SEC filing season may seem complex, but armed with the right knowledge and resources, it can indeed become a stress-free journey. Reviewing requirements, early preparations, and adherence to the provided tips can alleviate common stressors during SEC report preparation, bolstering your confidence in the filing process. Following these guidelines streamlines the SEC filing process, ensuring a stress-free season every year.
Remember to leverage available resources, automate processes where possible, and stay informed about regulatory updates. Now that you have access to this comprehensive guide, it’s an opportune moment to take charge of your SEC filing deadlines and uphold compliance at each juncture. Consider exploring solutions such as IRIS CARBON® to facilitate your SEC iXBRL mandate adherence.