Scenario Lee Burdell has just returned from a popular industry tradeshow. Her peers at the trade show kept mentioning the importance of non-traditional disclosures, footnotes and otherwise, when...

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Lee Burdell has just returned from a popular industry tradeshow. Her peers at the trade show kept mentioning the importance of non-traditional disclosures, footnotes and otherwise, when talking about their company’s 'financial reporting' duty.  She attended a 20-minute
eak-out session where the speaker, a Securities and Exchange Commission (SEC) employee, quickly reviewed the following non-traditional disclosure items for financial reporting that are now considered a 'compliance focus' of the SEC:
· ESG - Environmental, Social, and Corporate Governance, and
· Non-GAAP (Pro Forma Numbers)
Lee is the CEO of a typical corporation that has an aging Board of Directors.  Lee’s Board of Directors only scrutinizes the standard financial statements and traditional footnotes in her quarterly performance review.  Lee is wondering if she and the Board are looking at the co
ect information during the quarterly performance review or even disclosing the ‘right’ information to the shareholders!
You are the new-hire MBA at Lee’s corporation and she has asked you to prepare a memo with supporting appendices to address her concerns about the guidelines (i.e. ‘what is’ and ‘what is not’ required by the SEC) when disclosing non-traditional items, as listed above, in the 'financial reporting' documents of the corporation.
Write a memo with appendices. Suggestions for constructing your memo and appendices are outlined below.
Memo and Appendices
Constructing your memo :
Communicate the following, within the two-page and 700-word limit regarding what needs to be disclosed in the above list of non-traditional disclosures.  Before attempting the memo read from our textbook, Module 1 pages 16 – 18, and Module 5 pages 31-34. 
· The memo must include the general guidelines for each of the two non-traditional disclosure areas (ESG, and non-GAAP) as required by the SEC (if any).
· Reference the appendices within the memo, and
· The appendices, see comments below, will show specific examples and details.
· The following thoughts could/should be interwoven into the content of the memo:
· Why do we have disclosures/footnotes in the first place? (Why aren’t the financial statements, alone, sufficient?)
· What is the role of SEC regulation S-K?
· Discuss the role of the SEC and the FASB regarding financial reporting. Make sure you properly incorporate the term ‘GAAP’ in this discussion.
· What motivates management to use non-traditional disclosures?
Constructing the appendices :
Choose two publicly-traded companies that issue SEC 'financial reporting' documentation.  It is best to peruse the 'investor relations' area of the corporate website to see what items they are disclosing.  Bigger companies tend to be leading the way on non-traditional disclosure.
The attached appendices should provide a reference source for the memo.  The following items must be included.
· Use the latest 'financial reporting' information (i.e. 10-K information and other non-traditional disclosure items), prepare well-formatted table(s) that show examples of their non-traditional disclosures. Side-by-side comparison usually works well in tables like this! (But it is your choice on how to present this information.) This appendix may take a few pages to properly display the non-traditional disclosures; make sure that the displayed items are readable. Make sure your memo references this/these appendices/table(s).  The companies may have other available supplemental reports on non-traditional disclosures.
· Terminology definitions and examples for Lee. A convenient glossary style page is best here.
· Other appendices as needed. Feel free to add relevant appendices that make for a better response to Lee.
Submission Instructions
Submit your completed work product in PDF format to this assignment item. 
Finding Non-Traditional Disclosures
If you aren't sure how to find a 10-K here are a few hints to help!
Finding a 10-K
You can find the SEC annual report, also called a 10-K, in different ways:
· Search the company web site, locate “Investor Relations” and follow the links.
· Corporate web-sites tend to be more user-friendly and 
· Usually have all the required regulatory reports and other 'financial reporting' documents that you will need to complete this assignment.
· Or search the EDGAR (Links to an external site.) database from the SEC.
Finding "Pro Forma" or "Non-GAAP" Items in a 10-K
Once you open the 10-K, search for terms most likely to reveal pro forma and non-GAAP information. Suggested search terms are:
1. Non-gaap
2. Pro forma
3. Reconciliation
This computer screen shot shows a search (using CTRL+f on a Windows system) to locate the term "non-gaap".
Answered 2 days AfterApr 13, 2022


Rochak answered on Apr 15 2022
10 Votes
Non-traditional disclosures are the disclosures that are disclosed in the annual report by the company officials to provide more transparency in terms of what the company is doing and how the regulation across the globe has made it change the financial statements according to the accounting measures used. In the United States, GAAP is followed, but many measures are not allowed to be taken into consideration while preparing the annual report, but these statements/disclosures are important and therefore provide more transparency about the operations and the overall financial the non-traditional disclosures are disclosed. The cu
ent non-traditional disclosure which is considered a compliance focus by the SEC are as follows:
· ESG – Environmental, Social and Corporate Governance
· Non-GAAP (Pro-Forma Numbers)
With the increasing focus of investors on various accounting measures, it has been quite evident that in the future years’ non-traditional disclosures will be a mandatory requirement therefore companies should focus on this. Therefore, non-traditional disclosure is something that should be focused on by every company be it new or old, to give a clear view of the earnings and the outcome of the adjustment that the company can have because of the disclosure.
Non-GAAP disclosures are important and there in the annual report of companies in the first place because they are the disclosures that are excluded while preparing the actual financial statements based on GAAP measures. Also, the non-GAAP disclosure is placed in the annual report to provide greater transparency about the company.
In Table 1, attached in the appendix we can see that the two companies Microsoft Corporation, and Visa Inc. have given their non-GAAP disclosures, and these disclosures are required by the SEC because these make the companies more transparent and showcase the full financials, the requirement here is that because of the different tax treatments across the globe, the earnings of companies may...

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