Further to his brief January 30 remarks on the coronavirus (reported on here), SEC Chair Clayton joined Corp Fin Director Bill Hinman, Chief Accountant Sagar Teotia, and PCAOB Chair William Duhnke in this Statement today on the evolving audit and financial reporting-related challenges associated with the virus. Importantly, the Statement acknowledges that many US companies - including those based within and outside of the US (including China) - may be impacted in some way. Impacts are company-specific, and may range from audit-related access/diligence impediments to disruptions to business operations within and outside of China and/or dependent upon third parties (e.g., suppliers, distributors, customers) in China or other affected jurisdictions.
The Statement reminds companies that their plans and responses to events may be material to an investment decision, and thus should be properly considered and addressed in connection with their financial reporting and audit processes. Companies are specifically advised to consider potential disclosure of subsequent events in the notes to their financial statements, and encouraged to contact SEC staff with questions or - if warranted - to request relief from filing deadlines based on their particular circumstances that make a timely filing infeasible.
See also the UK FRC's release and guidance on coronavirus risk disclosures published yesterday, these WSJ articles: "U.K. Regulator Urges Companies to Report Coronavirus Risks," "How Coronavirus Could Disrupt the Auditing of Companies," "Commentary: Supply-Chain Risks From the Coronavirus Demand Immediate Action," and "Coronavirus Exposes Businesses’ Dependency on China," and our additional reports in today's Society Alert on Coronavirus disclosure.