On June 23, 2020, the SEC published updated Guidance on disclosures of operations, liquidity, and capital resources in light of COVID-19. The Guidance urges companies “to provide disclosures that allow investors to evaluate the current and expected impact of COVID-19 through the eyes of management and to proactively revise and update disclosures as facts and circumstances change.” It also notes that the disclosures in question may be material to voting decisions as well as investment considerations. Some specific areas of guidance include the transition to “telework”; supply chain and distribution challenges; the health and safety of employees and others; the availability of financing, including government assistance; and providing supplier and customer credit. In addition, the Guidance includes a series of questions that can help companies address specific investor concerns.
Also on June 23, the SEC’s Office of Chief Accountant issued a “Statement on the Continued Importance of High-Quality Financial Reporting for Investors in Light of COVID-19.” Among other things, the Statement focuses on significant estimates and judgments, the importance of disclosure controls and procedures as well as internal control over financial reporting; addressing complex or emerging financial reporting issues; and the critical role of audit committees. Issuers should take the Statement into consideration as they prepare their reports for the second quarter of 2020.
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This publication is for general information only. It is not legal advice, and legal counsel should be contacted before any action is taken that might be influenced by this publication.
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