NCACPA has formally submitted a comment letter in response to the Securities and Exchange Commission’s (SEC) proposed transition to optional semiannual reporting– a process shaped by extensive member engagement and technical analysis over the past two months.
The production of NCACPA’s comment letter began in late April, when members reached out to emphasize the need for a discussion to be had among NCACPA members and across the business and industry realm. The Association began to assemble the SEC Task Force in the first week of May. At the same time, we began setting up a virtual town hall to begin the dialogue with well-informed discussion. On May 27, we held this virtual event, involving SEC officials, representatives from PwC, and US Congressman Tim Moore, along with a group of attendees from the business and accounting communities. That conversation helped frame key issues for the Task Force, who finalized its comment letter by the third week in June.
The comment letter urges the SEC to take a targeted approach to semiannual reporting- rather than the broad, one-size-fits-all structure in the proposal. While acknowledging that quarterly reporting may not be ideal for every company, the Association concludes that allowing all issuers to opt into semiannual reporting would likely harm market efficiency, increase information asymmetry, and reduce comparability for investors- ultimately raising the cost of capital.
As a result, NCACPA recommends that- if adopted- semiannual reporting should be limited to a narrowly defined group of smaller issuers and potentially implemented as a pilot program subject to review. The letter also encourages the SEC to coordinate with standard setters and consider broader opportunities to reduce regulatory burden, including disclosure requirements and internal control compliance.
You can read NCACPA’s comment letter submission here. If you have questions about this topic or other policy matters, please contact NCACPA Coordinator of Advocacy & Outreach Will Edmondson.