Timeline ■ Keeps the process organized ■ Let’s look at the sample that I put in the course documents ■ Sets expectations for everyone ■ Can hold individuals accountable if they do not meet the deadlines that they agreed to
Preparing the Timeline – Internal Parties Audit Committee (AC) meeting date must be set (date agreed on by AC, CFO, internal audit if applicable and Outside Auditor) Agree on filing date with investor relations Agree on general ledger (GL) close date with GL team Agree dates with VP/Controller and CFO if necessary Agree dates with internal audit
Preparing the Timeline – External Parties Send key dates to the outside counsel and inside counsel Send draft timeline to outside auditors and get their agreement Send key dates to XBRL team Send draft timeline to tax team and get their agreement Declare timeline final, and distribute to the necessary parties
Timeline – Tips and Tricks ■ For most of the parties involved, be ■ With certain individuals, you will reasonable with their key dates, and need to do some hand holding. listen to them if they say that a date That’s just the way it works. Don’t doesn’t work. take it personally. ■ Send emails to parties a day or two ■ Make your own notes on he timeline before their key dates to make sure as you progress through the close to that they are on track to provide the see what dates were met or not deliverable. met, and adjust your process or timeline for next quarter.
Review question #1 (Required for CPE) Which internal group does the SEC Reporting Manager NOT need to coordinate the reporting timeline with? A. Investor Relations B. External Counsel C. The Independent Auditors D. The Payroll Department
Review question #1 (Required for CPE) A. Investor Relations must agree on the Which internal group does the SEC filing date. (Incorrect) Reporting Manager NOT need to B. External Counsel must be informed coordinate the reporting timeline with? of the time that the 10Q or 10K draft will be ready for their review, and A. Investor Relations when they will need to provide their comments back by. (Incorrect) B. External Counsel C. It is critical that the SEC Reporting Manager Coordinate with the C. The Independent Auditors external auditors on most of the dates within the timeline. (Incorrect) D. D. The Pa Payroll D Department D. D. The P he Payroll ll D Depa epartment will ll ha have minimal al i involvement i in t the SEC C Reporting g Process. ( . (Co Correct)
Review question #2 (Required for CPE) (Fill in the Blank.) When preparing the timeline, the SEC Reporting Manager should start with the __________ and word backwards. A. date the auditors will start fieldwork B. date that the 10Q/10K draft needs to be provided to the auditors C. Audit Committee meeting date D. the date that the General Ledger is closed
Review question #2 (Required for CPE) A. this date is near the beginning of (Fill in the Blank.) your SEC reporting cycle (Incorrect) B. While this date is important, is not When preparing the timeline, the SEC the starting point for working Reporting Manager should start with backwards. (Incorrect) the __________ and word backwards. C. C. This is is is the key da date that driv drives m mos ost of the o of other da dates. After this is da date is is A. date the auditors will start set, t , the S SEC EC R Reporting g Man anage ger can can fieldwork work rk b backw kwards ds t to d determin ine t the other k key dates. ( . (Co Correct) B. date that the 10Q/10K draft needs D. The general Ledger close date is one to be provided to the auditors of the first dates in the process, and is this too early to work backwards C. C. Audit Commi mmittee ee mee eeting g date from. (Incorrect) D. the date that the General Ledger is closed
Tie Out Binder ■ Cover Page and Spine
Review question #3 (Required for CPE) (Fill in the Blank.) The SEC Reporting Manager prepares the tie out binder because __________. A. it is explicitly required by the SEC B. the CEO must review it C. the auditors require a hard copy of the tie out binder D. the Company’s internal controls will generally require that the Company prepare a tie out binder.
Review question #3 (Required for CPE) A. The SEC does not have specific regulations regarding a company’s tie out binder. (Fill in the Blank.) (Incorrect) The SEC Reporting Manager prepares B. It is very uncommon that the CEO would review the tie out binder. (Incorrect) the tie out binder because __________. C. Audit firms will need to see the tie out A. it is explicitly required by the SEC support for the numbers in the 10Q/10K, but generally soft copies of the support is acceptable, and preferable in some cases. B. the CEO must review it (Incorrect) C. the auditors require a hard copy of D. D. The ma management of of SEC registered compa panies m mus ust maintain i internal c cont ntrols. the tie out binder It is common pr n practice for i internal cont ntrols t to require a a tie ou out binder that receives som ome D. D. the Company’s in internal al controls will ill form o of a appr pproval. ( (Co Correct) generally ly require that t the Compan any prepare a a tie o out bin inder.
Rolling Forward Period that we are rolling into Document to roll from Additional Comments If you disclose risk factors each quarter, copy and paste the risk Q1-19 (10Q) Q3-18 (10Q) factors from the 2018 (10K). Run a compare of the entire 2018 (10K) to the 2017 (10K), see what changed, and update the Q1-19 (10Q) as needed. Add year to date to income statement, footnote disclosures of expense/revenue amounts, and results of operations explanations Q2-19 (10Q) Q1-19 (10Q) in MD&A. Structure of document is unchanged, just need to roll forward Q3-19 (10Q) Q2-19 (10Q) dates. If you disclose risk factors each quarter, copy and paste the risk Q4-19 (10K) Q4-18 (10K) factors from the Q3-19 (10Q). Run a compare of the entire Q3-19 (10Q) to the Q3-18 (10Q), see what changed, and update the (10K) as needed.
Review question #4 (Required for CPE) Which of the following roll-forwards is typically the leas ast time consuming? A. Q4-2020 to Q1-2021 B. Q1-2021 to Q2-2021 C. Q2-2021 to Q3-2021 D. Q3-2021 to Q4-2021
Review question #4 (Required for CPE) A. This roll-forward is more challenging as it Which of the following roll-forwards is is difficult to roll-forward a 10Q from a 10K, and extra steps are involved. typically the leas ast time consuming? (Incorrect) A. Q4-2020 to Q1-2021 B. This roll-forward is the second easiest roll- forward, and is only slightly more difficult B. Q1-2021 to Q2-2021 than option C because. (Incorrect) C. C. Q2-2021 to Q3-2021 Q2 C. C. Thi his i is the the easiest o of the the roll-fo forwards a as on only t the d dates need t to o be upd pdated with D. Q3-2021 to Q4-2021 no new s section ons s needed. ( (Corre rrect) D. This roll-forward is more challenging as it is more difficult to roll-forward a 10K from a 10Q. (Incorrect)
Summary ■ Timeline ■ Tie out binder ■ Rolling forward the financial statements
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