The SEC is looking for companies to provide better disclosure on Brexit, cyber, and Libor-related risks.
According to the WSJ, reporting on Monday's FEI Current Financial Reporting Issues Conference, SEC Chair Clayton believes that "the potential impact of Brexit has been understated." While it appears that some companies are making what the SEC perceives as appropriately-detailed disclosure, others are not:
Some industries and companies likely will be more affected by Brexit than others. However, there is a range of detail in Brexit-related disclosures among companies in the same industry, Mr. Clayton said.
Company A, for instance, might provide a thoughtful analysis of the potential risks posed by a so-called hard Brexit, in which the U.K. leaves the EU without agreements on trade, finance and other key elements of the divorce. Details could include the effect of Brexit on the company's supply chain or its business prospects. Company B, however, might provide only a general statement that identifies Brexit as business threat on the horizon, Mr. Clayton said.
"I want to see the disclosure, to the extent that it's material and appropriate, gravitate to Company A," Mr. Clayton said.
SEC Corp Fin Chief Accountant Kyle Moffatt reportedly said the agency is looking for cybersecurity disclosure aligned with the SEC's new guidance - inclusive of board risk oversight, DC&P, and insider trading policies, and that the SEC may contact companies directly to better understand their disclosure if Staff learns about a cyber incident from the media. "The biggest key is making sure that there are procedures in place to make sure that the information is provided to all levels, all relevant levels, of management, so everyone is aware of what's happened and so that those issues can be addressed," he said.
Moffatt also noted that the SEC would be looking for disclosure on the impact of Libor's phaseout if/to the extent material to the company.