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Valuation practices under SEC scrutiny

Jaclyn Jaeger | September 27, 2016

Over the last several years, valuation and impairment issues have figured prominently in many of the Securities and Exchange Commission’s financial reporting enforcement actions. That effort shows no sign of waning.

“Valuation has been, and continues to be, one of the top areas that the SEC does focus on both from an overall regulatory standpoint, as well as from an examination standpoint,” says Paul Kraft, lead partner of Deloitte’s U.S. mutual fund practice, who was formerly with the Division of Investment Management. “The Office of Compliance Inspections and Examinations often looks at valuations as part of exams.”

Increasingly, U.S. regulators are going after corporate filers for potential material financial reporting errors and fair-value measurements that cannot be supported. Traditionally, the rule of thumb in determining whether a misstatement or omission was material and subject to SEC enforcement would be if there was a 5 percent or more deviation from... To get the full story, subscribe now.