The deadline for a company to file its annual 10-K document with the Securities and Exchange Commission, which had been 75 days after the end of the fiscal year, is moving to 60 days after the end of the fiscal year beginning with companies whose fiscal year ends on or after Dec. 15, according to this CFO.com story.
What does this mean for business journalists? If you’re used to looking for 10-K filings right before March 15 every day for companies whose fiscal year ends the same as the calendar year, it’s now time to start thinking about looking for these filings in late February and early March.
Helen Shaw wrote, “The change is an attempt to compel companies to report quarterly results faster, while still maintaining data integrity and executive accountability, notes Stephen Lis, national leader of KPMG’s CFO advisory services practice.
“The shortened timeframe, however, ‘makes it difficult to ensure that better disclosure is in fact getting out there,’ commented Nancy Wojtas, a partner in the law firm Cooley Godward Kronish. ‘It’s going to be a real problem to honor that timeframe,’ she said, especially for finance chiefs and chief executive officers who by law are charged with certifying the accuracy of 10-Ks and other financial reports. Those executives face stiff penalties under the Sarbanes-Oxley Act—the most extreme being a prison sentence—for certifying misleading financial statements.
“Wojtas expects that more companies will request the automatic, 15-day extensions offered by the SEC to file 10-K reports, a move that would not trigger any covenant defaults or concern a company’s bondholders or banks, she added. ‘There may be no alternative than to file [for an extension],’ she said.”
