The need for Contractual Obligations Tables amid Covid-19
Should the US Securities and Exchange Commission (SEC) do away with tables consisting of information that can be compiled elsewhere? This week CFA Institute’s Mohini Singh, ACA, outlines the CFA and Council of Institutional Investor’s arguments against some of the SEC’s proposed updates to Management Discussion and Analysis (MD&A).
Their response highlights that although many of the SEC’s proposals consist of eliminating information that is available elsewhere, this shifts the burden of collecting and collating the data from a single filer onto all individual analysts and investors.
The SEC is proposing to eliminate several tables which the CFA response highlights are extremely useful as they compile information that is often scattered throughout the filing into one central location. For example, Mohini highlights, in periods in which a company’s liquidity becomes of concern to investors, such as at the present moment, it is useful for investors to be able to turn to a particular section of the filing and readily see what a company’s future contractual obligations are, without having to hunt for each piece of information throughout the filing. The Covid-19 pandemic is illustrating how the aggregation and tabular presentation of information, such as contractual obligations, is very useful to investors.
Our take? Of course, the SEC (and other regulators around the world) will find it much easier to ease the burden of reporting overall once the vast majority of disclosures are marked up with structured data as Inline XBRL. New tools from innovative software vendors make this simpler and easier to control than ever before. Once (for example) all of the data in an MD&A is marked up, the process of pulling that together into summary tables is something that is vastly easier to do than it is today.