February 3, 2023

SEC Update! At Long Last, the Financial Reporting Manual Is Up-to-Date(ish)

Holland & Knight SECond Opinions Blog
Paul Monsour | Jessica B. Magee
Gavel and scale resting on desk

The SEC's Division of Corporation Finance (Corp Fin) released a long-awaited update to its Financial Reporting Manual (FRM) in late January. The updates are effective as of Dec. 31, 2022, and address several matters. This is the first update to the FRM since November 2020.

Originally developed as a collection of internal staff guidance, the FRM was first published on the SEC website in 2008. Although the SEC is careful to note that the FRM is intended to serve as a collection of informal, non-authoritative guidance, it serves for many as a key resource for how the agency analyzes important issues involving accounting and disclosure conclusions.

Unfortunately, Corp Fin staff did not provide hoped-for updates to existing guidance on financial statements for acquired businesses (i.e., the significance tests in Rule 3-05 of Regulation S-X, which generally requires separate audited annual, and unaudited interim, pre-acquisition financial statements of an acquired or to-be-acquired business). Nevertheless, the updates are important, particularly for companies with financial guarantors.

Below, you'll find a bird's-eye view of the updated topics helpfully hyperlinked to the relevant portion of the FRM, and here you will find our changed-page-only redline of the modifications from the staff's prior update.




Communications with CF-OCA

Updates the contact information for Corp Fin's Chief Accountant's Office (CF-OCA)

1430, 2500, 2600, 4110.5, 4110.7, 5310.1, 6220.4, 6230.2, 6340.2, 6350.1, 6410.1, 6410.2, 6410.12, 6500 and 9820

Reflects the amendments to Rules 3-10 and 3-16 and addition of new rules 13-01 and 13-02 of Regulation S-X

10110.1, 10110.4, 10110.5

Updates the Emerging Growth Company (EGC) revenue threshold based on the inflation-related adjustment announced in September 2022


Clarifies the implementation date of Accounting Standards Update (ASU) 2018-12, Financial Services-Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts for certain registration statements

6120.4, 6120.5 and 11100

Removes certain outdated information, such as guidance on the adoption of ASC 606

The SECond Opinions Blog will continue to monitor the agency's activity in this space and provide further updates. If you need any additional information on this topic – or anything related to SEC enforcement – please contact the authors or any member of Holland & Knight's Public Companies and Securities Team or Securities Enforcement Defense Team.

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