SEC’s Corp Fin Provides COVID-19 Disclosure Guidance
On March 25, 2020, Corp Fin issued “CF Disclosure Guidance: Topic No. 9” to provide guidance on disclosure of the effects of COVID-19. The guidance provides a framework for companies to analyze the effects of COVID-19 and their risk exposures.
The questions include the following:
- “How has COVID-19 impacted your financial condition and results of operations? In light of changing trends and the overall economic outlook, how do you expect COVID-19 to impact your future operating results and near-and-long-term financial condition? Do you expect that COVID-19 will impact future operations differently than how it affected the current period?”
- “How has COVID-19 impacted your capital and financial resources, including your overall liquidity position and outlook? Has your cost of or access to capital and funding sources, such as revolving credit facilities or other sources changed, or is it reasonably likely to change? Have your sources or uses of cash otherwise been materially impacted? Is there a material uncertainty about your ongoing ability to meet the covenants of your credit agreements?”
The guidance further addresses the difficulty of providing earnings guidance when the impact of COVID-19 has prevented timely completion of financial statements. Potential approaches include reporting non-GAAP measures reconciled to an estimated range of the equivalent GAAP metric, such as provided EBITDA reconciled to a range of GAAP earnings.