SEC Chief Accountant Highlights OCA Priorities During The Pandemic

In a public statement, SEC Chief Accountant Sagar Teotia stressed the importance of high-quality financial reporting during the COVID-19 pandemic. He stated that the Office of the Chief Accountant ("OCA") "stands ready" to provide assistance.

Mr. Teotia highlighted the following measures taken and topics addressed by the OCA during the pandemic:

• Public Statements. Mr. Teotia stated that the OCA communicated its views on emerging issues in a "timely, transparent, accessible manner" so as to support the SEC in its response to the pandemic. Mr. Teotia also applauded IOSCO for its guidance regarding "high-quality" disclosures (see previous coverage) and continuing international collaboration.
• Accounting Consultations. Through stakeholder engagement, the OCA resolved emerging COVID-19-related issues including, among others, interpretations of the CARES Act and the accounting for Main Street Lending Program loan participation agreements.
• Judgments and Estimates. Mr. Teotia reiterated that the OCA staff does not object to "well-reasoned" judgments and estimates made by companies fulfilling financial reporting responsibilities (see previous coverage). Mr. Teotia stated that significant judgments and estimates should be disclosed in an "understandable and useful" manner to investors, consistent with the company's specific facts and circumstances.
• Internal Control over Financial Reporting ("ICFR") and Disclosure Controls and Procedures ("DCP"). Mr. Teotia emphasized the importance of ICFR and DCP in high-quality financial information, and reminded preparers that if any changes to the reporting process will "materially affect" a company's ICFR, the change must be disclosed in quarterly filings.

Additionally, Mr. Teotia discussed OCA's ongoing priorities: (i) shareholder engagement through the consultation process and interactions with audit committees, (ii) rulemaking, like the auditor independence final amendments in Rule 2-01 of Regulation S-X (see previous coverage), (iii) oversight of the Financial Accounting Standards Board and Public Company Accounting Oversight Board, and (iv) international accounting, audit and disclosure matters.