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VideoAccounting and SEC Update: What Public Companies Should Know for Year-End
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In Weaver’s Accounting and SEC Update: Q3 2026 webinar, Phil Ilgenstein, Richard Steen, David Lange and Greg Englert discussed developments that public companies should be considering as they move toward year-end reporting. Topics included the SEC’s newly created Financial Reporting and Accounting Unit, evolving comment letter trends, Q3 tax provision considerations, proposed changes to filer status requirements and recent restatement trends.
As public companies move toward year-end reporting, the regulatory picture is somewhat mixed. Some SEC proposals could simplify reporting requirements for many registrants, even as the agency sharpens its focus on complex accounting judgments, controls and disclosures. At the same time, Q3 brings its own accounting and tax considerations that can affect year-end results and reporting. For finance and accounting leaders, the quarter provides an opportunity to address those issues before the demands of year-end reporting intensify.
SEC Creates Financial Reporting and Accounting Unit
In August 2026, the SEC established a new Financial Reporting and Accounting Unit within its Division of Enforcement, bringing together attorneys and accountants with specialized experience in financial reporting, accounting, auditing and securities regulation. The unit is intended to centralize resources for complex accounting and financial reporting matters and coordinate enforcement efforts across SEC divisions and offices.
The creation of a dedicated unit does not introduce new requirements, but it signals a more coordinated approach to identifying and pursuing potential financial reporting violations.
While financial reporting fraud remains a focus, the unit’s mandate extends more broadly to accounting, corporate and auditor misconduct. That could mean increased technical scrutiny of complex judgments, controls, audit evidence and disclosure decisions, as well as greater attention to management and audit committee oversight.
For public companies, many of the appropriate responses are familiar. Management should continue assessing risks in areas involving significant judgment or complexity, including revenue, estimates, reserves, valuations, non-GAAP measures and unusual transactions. Companies should also reassess disclosure controls and internal control over financial reporting and maintain documentation supporting significant judgments, materiality conclusions and remediation decisions.
The increased focus on governance means audit committees also should understand how significant accounting issues are identified, escalated and resolved within the organization. The SEC’s new structure could bring greater scrutiny not only to the accounting conclusion itself, but also to the processes and oversight supporting that conclusion.
SEC Comment Letters Become More Targeted
Overall SEC comment letter volume has continued to decline, but that does not necessarily mean less scrutiny. Instead, attention has become more concentrated in high-priority areas considered particularly relevant to investors. The SEC generally reviews each registrant’s periodic filings at least once every three years, and companies with disclosures involving current areas of regulatory interest, including artificial intelligence (AI) and geopolitical impacts, may be more likely to receive attention.
Management’s Discussion and Analysis (MD&A) and segment reporting have increased as a percentage of comment letters, while familiar topics such as non-GAAP measures, business combinations, revenue recognition and complex financing instruments remain prominent.
For MD&A, companies should avoid generic or boilerplate disclosures and instead explain the factors affecting operating results, liquidity and financial condition. That includes identifying significant drivers of changes in key metrics, discussing critical accounting estimates and explaining offsetting changes that may be obscured by relatively stable overall results. Companies should also consider disclosures around matters that could impact operating metrics or liquidity in future periods.
Segment disclosures are another area receiving attention following enhanced requirements under ASC 280. Common issues include inadequate disaggregation or disclosure of segment expenses, problems involving measures of segment profit or loss and failure to reconcile those measures appropriately to consolidated results. Non-GAAP measures also continue to draw comments when companies give them greater prominence than comparable GAAP measures, fail to provide appropriate reconciliations or inconsistently apply adjustments from period to period.
Business combinations and revenue recognition also remain recurring sources of SEC comments. For acquisitions, regulators continue to focus on required disclosures such as post-combination results, pro forma financial information and the factors supporting recognized goodwill, as well as whether a transaction has been appropriately classified as a business combination or asset acquisition. Revenue recognition comments frequently involve performance obligations, disaggregation of revenue, variable consideration and judgments about principal-versus-agent treatment.
Complex financing arrangements present another recurring challenge, particularly when instruments include conversion, redemption or other features that complicate debt-versus-equity classification.
Q3 Tax Reporting: Prepare Now for Year-end
For many calendar-year public companies, Q3 is where prior-year tax assumptions meet the completed tax return. That makes the return-to-provision analysis an important part of the quarterly close and an opportunity to identify issues before the year-end provision. Differences between the prior-year provision and the completed return should be identified and evaluated rather than recorded as a single adjustment. If the return is finalized by quarter-end, applicable adjustments generally become part of the Q3 provision; if finalized later, they become part of the year-end calculation.
Companies should determine what is driving each true-up, including changes in estimates, return elections or methods, tax-law changes, errors or discrete items, and consider the implications for deferred taxes and the effective tax rate.
Other Q3 considerations include the continuing effects of tax-law changes on Section 174A research expenditures, bonus depreciation, Section 163(j) interest deductions and Section 162(m) executive compensation limitations. Companies also should update their Pillar Two analysis based on the jurisdictions in which they operate and reassess applicable top-up taxes and safe-harbor eligibility.
Valuation allowances often require extensive analysis. Companies should evaluate both positive and negative evidence, including cumulative results, forecasts, the timing of deferred tax liability reversals, expiring attributes and available tax-planning strategies. Changes in tax law can affect both the amount and timing of taxable income available to realize deferred tax assets, making updated reversal schedules particularly important.
The effective tax rate ties these issues together. ASU 2023-09’s expanded income tax disclosures make significant rate-reconciliation items and jurisdictional cash taxes more visible. As companies approach year-end, management should be prepared to explain which rate drivers are recurring and which result from discrete Q3 items such as return-to-provision adjustments, valuation allowance changes or Pillar Two taxes. Q3 can serve as a “control quarter” for resolving classification, data and documentation issues before the annual provision and disclosures are completed.
Proposed Filer Status Changes Could Significantly Alter Reporting Requirements
Among the SEC proposals discussed this quarter, proposed changes to filer status could have particularly significant implications for public companies and companies considering an initial public offering (IPO).
Under the proposal, the current five filer classifications would essentially be reduced to two: large accelerated filers and all other issuers. The public float threshold for large accelerated filer status would increase from $700 million to $2 billion. Rather than measuring public float based on a company’s stock price on a single date, the proposal would use a 10-day average and generally require a company to meet the threshold for two consecutive years before entering large, accelerated filer status.
The proposal also would provide a five-year on-ramp for newly public companies, during which they would receive emerging growth company accommodations regardless of size. These changes could have important implications for reporting requirements and auditor attestation under Section 404(b) of the Sarbanes-Oxley Act.
The SEC estimates that the proposed changes would remove approximately 60% of companies currently classified in the top filer tier from that classification. For affected companies, a change in filer status could alter filing deadlines, disclosure requirements and, importantly, whether auditor attestation of internal control over financial reporting is required under SOX Section 404(b). However, the proposed relief from auditor attestation would not eliminate management’s underlying responsibility for ICFR.
Management would still be responsible under SOX Section 404(a) for maintaining effective ICFR, evaluating its effectiveness and supporting its annual conclusion with sufficient evidence. The removal of auditor attestation therefore should not be viewed as a reason to become less disciplined around internal controls. Further, the external auditor may still test certain controls as part of the financial statement audit even when a separate ICFR opinion is not required.
Because these changes remain proposals, companies should continue complying with existing requirements while following the rulemaking process and considering how a future change in classification could affect their reporting and compliance obligations.
Restatements Continue to Decline, but Familiar Issues Remain
Financial statement restatements also continue to trend downward. According to Ideagen Audit Analytics data, total restatements decreased 18% in 2025 compared with 2024. The figures include both “Big R” restatements, which require previously issued financial statements to be revised and reissued, and “little r” restatements, in which an error is corrected in current-period filings with appropriate disclosure.
Despite the overall decline, several recurring accounting issues continue to drive restatements. Debt and equity classification remains prominent, particularly for complex instruments with characteristics of both. Revenue recognition also continues to generate adjustments because of its significance to operating performance.
Cash flow classification represents another recurring issue. These errors are disproportionately associated with little r restatements because they frequently involve presentation or classification among cash flow categories rather than changes to the company’s overall financial results.
These trends reinforce many of the same themes seen in SEC comment letters and the creation of the Financial Reporting and Accounting Unit: complex instruments, revenue recognition, significant judgments and the controls supporting financial reporting continue to warrant attention.
Preparing for the Year-end Reporting Cycle
Taken together, the Q3 developments point toward a year-end reporting environment in which companies may see regulatory requirements evolve while scrutiny remains concentrated on the accounting and disclosure issues considered most significant to investors.
For finance, accounting and tax teams, the third quarter provides an opportunity to identify difficult accounting issues, strengthen supporting documentation, complete tax provision analyses and confirm that disclosure and internal controls are operating as intended. Audit committees also should understand significant judgments and emerging reporting issues before the year-end close begins.
Companies that use Q3 to address these matters can enter year-end with fewer unresolved questions and a clearer explanation of the judgments, controls and disclosures supporting their financial reporting.
Weaver’s accounting and tax advisors offer companies several ways to sharpen their focus on upcoming accounting and tax regulations. Sign up for Weaver’s Quarterly Accounting and SEC Update webinars, podcasts and the Executive Resource Center. To discuss your unique circumstances, we encourage you to contact us to schedule a consultation.
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