SEC Enforcement Action Puts Spotlight on Segment Reporting

14 December 2016
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Key takeaways

  • The SEC staff recently entered into a cease and desist order with a company alleging that the company’s failure to properly identify its reportable segments in its SEC periodic reports resulted in violations of the reporting, books and records, and internal control provisions of the Securities Exchange Act of 1934.
  • Issuers should review their segment reporting analysis and documentation to confirm compliance with the applicable accounting standards.
  • The analysis should be properly documented, and when a company determines that it is appropriate to make any changes to its reportable segments, the reasons for the change should be appropriately documented and the changes should be accurately disclosed.