SEC and Public Company Accounting Oversight Board ("PCAOB") leaders alerted market participants to potential impacts from the coronavirus on financial disclosure and reporting.
In a joint statement, SEC Chair Jay Clayton, SEC Division of Corporation Finance Director Bill Hinman, SEC Chief Accountant Sagar Teotia and PCAOB Director William D. Duhnke III described challenges to auditing public companies with operations in emerging markets and in light of potential impacts of the coronavirus. The agencies encouraged issuers to consult with their audit committees and audit firms to maintain robust financial reporting, auditing and review processes. Specifically, the agencies urged issuers to consider (i) the potential disclosure of subsequent events in financial statements, (ii) the possibility of relief granted from filing deadlines in the event that an issuer is unable to meet this requirement due to circumstances beyond their control and (iii) engaging with the SEC or PCAOB to discuss any questions regarding the potential effects of the coronavirus or subsequent event disclosure.
The SEC noted that it is considering whether to provide additional guidance, and that it may grant related relief on a case-by-case basis in light of the potential effects of the coronavirus.
In addition, the agencies highlighted that the PCAOB is restricted from examining the audit work and practices of member firms based in China. In light of these restrictions, the agencies made clear that they expect U.S. audit firms to bring "appropriate increased attention and resources to their internal and cross-network quality control processes."
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