SEC Reporting: Types, Challenges & Tips for Success

For organizations seeking to embark on an IPO, it is essential to obtain a solid understanding of SEC reporting requirements as soon as possible, as these activities can become quite complex and time-consuming without proper oversight – and severely impact the potential for a company to establish a successful public offering.

As experts in helping businesses strategically navigate the process of going public and integrate effective SEC reporting processes, we’ve outlined some essential information to help you put your best foot forward.

Important things to know about SEC Reporting:

• What SEC Reporting is and the common types of SEC reports and filings
• The most common challenges businesses face when conducting SEC Reporting
• What a company needs to do to establish effective and successful SEC Reporting processes

What is SEC Reporting?

SEC reporting involves compiling and presenting financial and business information, reports, and disclosures to the Securities and Exchange Commission (SEC) to provide transparency to investors and the general public, helping them make informed decisions regarding purchasing or selling a company’s stock or securities.

All publicly traded organizations are required to file with the SEC for numerous types of events.

Common types of SEC reports, forms, and filings:

• 10-K Annual Report: Filed yearly and includes overview of financial performance (audited financial statements, business information, risk factors, etc.)
• 10-Q Quarterly Report: Filed quarterly and includes unaudited financial statements and periodic updates on financial performance.
• 8-K Current Report: Filed during significant events (e.g. merger or acquisition) and/or material developments (e.g. change in leadership) that need to be shared with shareholders and the general public.
• Proxy Statements: Filed in the event that a company needs to acquire shareholder input for corporate governance ongoings (e.g. electing a new director).
• Form 4 Insider Transactions: Filed by company insiders (e.g. directors) to outline stock purchases or sales.
• Form 13D & Form 13G: Filed by individuals who have a large ownership stake in a public company to outline their intentions and holdings.
• Forms S-1, S-10 & Registration Statements: Filed in the event that a company wants to register securities with the SEC, typically as part of the IPO and pre-IPO process.

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What are some of the most common challenges of SEC Reporting?

SEC reporting can be a difficult and lengthy process for public companies and organizations seeking to embark on an IPO due to the complexity of SEC rules and regulations, the need to compile years’ worth of financial and historical data, and having to navigate ever-evolving auditor and shareholder expectations and requests.

Common SEC Reporting challenges:

• Navigating stringent and ever-evolving SEC regulations.
• Adhering to strict deadlines set by the SEC and external auditors.
• Compiling relevant financial and historical data from various departments and systems.
• Identifying gaps with historical footnote disclosures versus public company requirements (e.g. segment reporting, guarantor disclosures).
• Ensuring data accuracy and integrity to guide the development of reliable financial reports.
• Maintaining effective internal controls and identifying and addressing material weaknesses.
• Integrating complex accounting standards and ensuring GAAP compliance.
• Managing legal and regulatory risks associated with non-compliance.
• Implementing robust data security and cybersecurity initiatives and understanding where and how threats may arise.
• Collaborating with auditors to review statements and disclosures and navigating auditor expectations and requests.

What does a company need to do to establish successful SEC Reporting processes?

To successfully conduct SEC reporting, it is essential for public companies or organizations planning for an IPO to have powerful financial reporting systems, integrate robust internal controls and cybersecurity initiatives to safeguard their company and teams from risk, and ensure they hire employees with the right skills to guide the success of the project.

To navigate some of these challenges, it is often beneficial to turn to a trusted partner or team of financial and/or risk consultants to reduce complexities and strategically execute key initiatives.

Quick tips and steps for establishing successful SEC Reporting processes:

1. Conduct a regular review of the SEC’s releases to ensure an understanding of the regulatory requirements the organization must adhere to.
2. Develop a reporting calendar that outlines key filing deadlines to guide project success.
3. Implement, maintain, document, and test robust internal controls for financial reporting to ensure data accuracy and integrity.
4. Integrate or optimize financial systems to facilitate accurate and timely data collection, consolidation, analysis, and consistency.
5. Foster alignment across teams to ensure regulatory updates and changes to accounting standards are properly communicated and understood.
6. Document and standardize processes for compiling, testing, and reporting financial information.
7. Communicate with external auditors as early as possible to effectively meet their expectations and proactively resolve any potential issues.
8. Conduct risk assessments on a regular basis to understand potential financial reporting risks and integrate measures to overcome them.
9. Conduct scenario planning for potential economic disruptions, business transitions (e.g.: M&A or restructuring), and/or complex transactions to guide strategic decision making in the event of rapid change or growth.
10. Develop robust cybersecurity and data privacy initiatives to protect sensitive information from threats and breaches.
11. Ensure stakeholders, directors, and committees are kept informed of reporting processes and compliance efforts to build trust and credibility.
12. Monitor and continuously improve SEC reporting processes to ensure alignment with current rules, regulations, standards, and best practices.
13. Consider hiring a consultant to provide expert insight into the SEC reporting process and drive quick and reliable progress.

Final thoughts on how to drive SEC Reporting success and efficiency

To drive SEC reporting success and efficiency, it is essential to take a proactive and organized approach to ensure resources are properly allocated, reduce the potential for operational interruptions to occur, and establish reliable and trustworthy relationships with investors, regulatory authorities, and the general public.

For best results, it is important to consider hiring a trusted partner or team of consultants to provide the expertise that is needed to seamlessly adhere to strict rules and regulations, integrate robust reporting processes, and pave the way for a successful IPO.

Bridgepoint Consulting has a team of SEC reporting experts ready to help you with:

• Implementing GAAP accounting standards and best practices.
• Assessing your current accounting and FP&A environments for gaps and areas of improvement.
• Condensing financial closing cycles to adhere to public company reporting calendar timelines/
• Building out the MD&A section of 10-Ks and 10-Qs.
• Assisting with the implementation of leading financial reporting solutions and systems.
• Conducting risk and cybersecurity assessments to overcome potential issues, safeguard an organization, and develop a proactive approach to risk.
• Fostering successful collaboration with investors, external auditors, the SEC, and other stakeholders.
• Managing the IPO process to ensure resources are allocated to where they’re most needed and provide leadership with more room to focus on overall goal setting and actualization.

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Insights By

Scott C. Bartley, CPA, CVA

Consultant

Bridgepoint Consulting Consultant Spotlight: Scott C. Bartley, CPA, CVA