Association for Financial Professionals
7315 Wisconsin Avenue
Suite 600 West
Bethesda, Maryland 20814
May 23, 2002
Jonathan G. Katz
U.S. Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
Re: File No. S7-08-02
Dear Mr. Katz:
The Association for Financial Professionals (AFP) welcomes the opportunity to comment on the Securities and Exchange Commission's (SEC) Proposed Rule: Acceleration of Periodic Report Filing Dates and Disclosure Concerning Website Access to Reports. The membership of our Association includes approximately 14,000 financial executives employed by over 5,000 corporations and other organizations. Our members represent a broad spectrum of financial disciplines and their organizations are drawn generally from the Fortune 1000 and middle-market companies in a wide variety of industries, including manufacturing, retail, energy, financial services, and technology.
AFP opposes the proposed rules to reduce the required time for filing from 90 days to 60 days after year-end for Form 10-Ks, and from 45 days to 30 days after quarter-end for the Form 10-Qs. Our opposition is driven by the severity of compressing the time frames by a third, which is compounded by the short implementation period provided for compliance.
A recent survey of our membership indicated that most financial professionals believe that the costs of accelerating Form 10-K and the Form 10-Q filing dates outweigh the benefits. Additional costs that were identified in discussions with AFP members include increased staff time and external audit resources, and obtaining/developing additional systems or system enhancements. There also is considerable concern that reduced reporting quality would result from the decreased review time available to financial management, business units, the audit committee, legal counsel and audit functions.
We understand and appreciate the SEC's efforts to achieve more timely reporting of financial performance. However, we believe that the reporting timeframes in the proposal overreach, and impose excessive burdens and costs on public companies.
Therefore, we recommend that the SEC reduce the filing dates to 75 days after year-end for Form 10-Ks and 35 days after quarter-end for Form 10-Qs. This adjustment would allow more time for report production and quality control reviews.
We also recommend that the SEC delay the proposed effective date of fiscal years ending after October 31, 2002, to allow additional time for implementation of changes necessary for compliance. Based on our survey results, many companies would require at least 12 months to implement revised processes and systems necessary to meet the changed filing dates.
We support the proposed rules requiring companies to disclose in the Form 10-K that reports are available on the company web site the same day that the reports are filed with the SEC, if the company operates a web site. The study of 152 public companies with a $75 million public float by the SEC's Office of Economic Analysis indicated that all had web sites and that 83 percent provided some form of access to their filings over the Internet. These results indicate that it would not require significant effort by most companies to make the filings available electronically.
AFP supports the SEC in its goal to improve the quality of information for investors. We also agree with limiting the accelerated filing dates to companies with a public float of at least $75 million. Larger capitalized companies generally are more likely to have enterprise-wide automated systems that are necessary for shortened reporting times.
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On behalf of our 14,000 members, AFP appreciates the opportunity to comment on the SEC's proposed rule and welcomes the opportunity to meet with you to discuss any of our positions. If you have any questions, please contact Gregory Fletcher, AFP's Director of Financial Accounting and Reporting, at (301) 961-8869.
Alvin C. Rodack, CCM
The Ohio State University
Government Relations Committee
James R. Haddad, CCM
Vice President Corporate Finance
Cadence Design Systems, Inc.
Financial Accounting and Investor Relations (FAIR) Task Force