
Hot Button Issues
“Hot Button” Issues for SEC/ SEC Comment Trends
- Revenue recognition
- Equity and stock based compensation
- Common Stock Valuation
- Complex financial instruments and related assumptions
- Acquisition – Business Combination
- Investment
- Related Party Transactions
- Disclosure Quality and Completeness
Other Areas to Consider
- Goodwill and intangible assets with related impairment charges, if any
- Foreign exchange conversion
- Contingencies
- Inventory valuation and reserves
- EPS and dilutive EPS
- MD&A and related party transactions
- Segment reporting
- Recently issued accounting standards
- Compensation and related disclosures
- Pro Forma Issues
Equity/ Stock Based Compensation
- Audit the Cap table and ensure all stock ownership records are up to date
- Understand the terms of all warrants and convertible instruments and determine how filing an IPO will affect its treatment
- Review the articles of incorporation and By-laws
- Understand and evaluate the capital structure
- Identify and all related party transactions and contracts
- Prepare for SEC comments on Common Stock Valuation
Quarterly Financial Information and Financial Statement Disclosures
- Preparation of quarterly financial statements
- Flux Analysis
- Review Financial statement disclosures – prepared in accordance with US GAAP and includes disclosures specific to SEC registrants:
- Segment Reporting
- Management basis if accounting judgment
- Compute EPS for all periods
- Any rational for non-GAAP measures
- Resolve and address all other critical accounting issue matters