Disclosure Overload – Edith Orenstein on SEC 160413 Reg S-K concept release on Financial Disclosure

April 14, 2016

To Friends of CFO Network:

Most of us, CFOs or other financial statement users, complain about the length and growing length of financial disclosures.  We thought this concept release from SEC was quite interesting – and as there is a chance for one to voice their opinion, we chose to pass this blog from Edith Orenstein along.

Note:  Edith Orenstein, as Director of Accounting Policy Analysis & Communications for Financial Executives International (FEI) supported and coordinated Rick’s efforts while representing life science companies and microcap companies on the elite 2005 SEC Advisory Committee on Smaller Public Companies.  She initiated the FEI financial reporting blog in 2004 and it has been a great source for all CFOs.  Since Edith left FEI, she has continued to blog. 

SEC's Seven Wishes in Concept Release on Disclosure (Reg S-K)

By Edith Orenstein
Reprinted with permission

It's here! The SEC has issued its Concept Release entitled, Business and Financial Disclosure Required by Reg S-K. Approved at an open commission meeting earlier today, the Concept Release is an integral part (or 'foundational product,' as described by SEC Chair Mary Jo White) of the Commission's Disclosure Effectiveness initiative

As detailed in the MACPA blog, the Concept Release can be boiled down to seven general areas, six of which begin with the phrase "Whether, and iso, how." Being a fan of mnemonics, I view these as the 'Seven Wishes,' described in the Concept Release as follows:

  1. whether, and if so how, specific disclosures are important or useful to making investment and voting decisions and whether more, less or different information might be needed; 
  2. whether, and if so how, we could revise our current requirements to enhance the information provided to investors while considering whether the action will promote efficiency, competition, and capital formation;
  3. whether, and if so how, we could revise our requirements to enhance the protection of investors;
  4. whether our current requirements appropriately balance the costs of disclosure with the benefits;
  5. whether, and if so how, we could lower the cost to registrants of providing information to investors, including considerations such as advancements in technology and communications;
  6. whether, and if so how, we could increase the benefits to investors and facilitate investor access to disclosure by modernizing the methods used to present, aggregate and disseminate disclosure; and
  7. any challenges of our current disclosure requirements and those that may result from possible regulatory responses explored in this release or suggested by commenters.

If there ever was a time for constituents to provide their 'wish list' to the SEC on how to improve disclosures, now would be that time. Although early hopes of some constituents were focused on reducing 'disclosure overload,' some may say the genie was let out of the bottle when the Commission began referring to the project by the broader title of 'disclosure effectiveness.' However, the broader title incorporates the notion – consistent with the SEC's mission of protecting investors, maintaining fair, orderly and efficient markets, and facilitating capital formation – that certain increases in disclosure may be necessary to enhance the usefulness of disclosure to investors and others, with the goal of enhancing disclosure being primary, and the goal of making disclosure 'efficient' being a secondary, allied goal.  

As noted by Chair White at the open commission meeting earlier today (April 14, 2016), the disclosure effectiveness initiative is, "a multi-faceted effort that began in late 2013 with a staff report to Congress, mandated by the JOBS Act, on how to update and modernize our disclosure requirements." The Chair then commissioned SEC staff to do indepth studies on the disclosure requirements in Reg S-X and S-K, and there were some preliminary invitations for public comment leading up to today's formal issuance of the Concept Release.

In addition to Congressional interest, other groups orbiting the disclosure effectiveness initiative include a number of SEC advisory committees and private sector constituent groups. The Concept Release notes, "we welcome comments from investors, registrants and other market participants on any other concerns related to our disclosure requirements," and, "[i]n addition to comments received on this release, we will consider any input from investor focus group studies or surveys, the Investor Advisory Committee and the Advisory Committee on Small and Emerging Companies."

The Concept Release carries a 90-day comment period. 

Edith Orenstein

Content and Communications Specialist; Accounting Policy, Regulatory

Note:  Edith Orenstein informs us that one can access this and her ongoing blogs:

  • just link to the post in the MACPA blog (which Edith also wrote): 


From there is a box in upper right corner of blog for people wishing to receive email alerts from the blog.

Disclosure Overload – Edith Orenstein on SEC 160413 Reg S-K concept release on Financial Disclosure