Candela Solutions LLC
An Advisory Firm To US Public Companies

SEC Disclosure Control Essentials

SEC Disclosure Control Essentials; including Writing Strong MD&As

The SEC defines disclosure controls as procedures designed to ensure that information required to be disclosed to the SEC is properly recorded, processed, summarized and reported, within the time periods specified by SEC rules and forms. In addition, Section 302 of SOX requires the CEO and CFO of public companies to each certify the financial and other information contained in the company's annual and quarterly reports. Specifically, the rules require:

  • Officers to certify that:
    • They are responsible for establishing, maintaining and regularly evaluating the effectiveness of the issuer's internal controls.
    • They have made certain disclosures to the issuer's auditors and the audit committee of the board of directors about the issuer's internal controls.
    • They have included information in the issuer's quarterly and annual reports about their evaluation and whether there have been significant changes in the issuer's internal controls or in other factors that could significantly affect internal controls after the evaluation.
  • Public companies need to maintain and regularly evaluate the effectiveness of disclosure controls and procedures designed to ensure that the information required in reports filed under the Securities Exchange Act of 1934 are recorded, processed, summarized and reported on a timely basis.

It is this last point of maintaining and evaluating the effectiveness of disclosure controls which is a primary focus of this training. We will share recent enforcement actions on this matter and discuss tools to mitigate the risks of disclosure non-compliance. This includes reviewing actual disclosures, especially within the Management, Discussion and Analysis (MD&A) section of annual and quarterly reports. Companies must remember that while the focus of the financial statements and relating footnotes is mostly a historical perspective, other sections of the annual and quarterly reports must also disclose material forward-looking information that is 'probable' to occur. The training helps attendees understand what the SEC is looking for and how to craft disclosure to avoid negative legal consequences down the road.

The training session covers:

  • SEC requirements
  • SEC enforcement actions
  • Types of disclosure controls
  • Disclosure control assertions
  • Disclosure control examples
  • Disclosure committee responsibilities
  • Plain English writing techniques
  • Case examples of recent MD&As

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