IMA’s Financial Reporting Committee’s comment letter argued that a “materiality screen” won’t reduce repetition because it will be too tempting, in consideration of ever-present litigation exposure, to simply repeat disclosures made in the prior year rather than document that the omission is immaterial. The FRC’s letter recommended that the requirement for an earlier-year comparison be deleted, except where the financial statements have been restated, and suggested that a requirement be added to comment on multiyear trends, which would replace a boilerplate with more meaningful disclosure.

Cynthia M. Fornelli, executive director of the Center for Audit Quality, suggested that the SEC provide additional flexibility by allowing a registrant to omit discussion of the earliest of the three years not only if it had been previously filed in its prior Form 10-K but also if it were previously filed in any SEC filing on EDGAR made by that registrant under the Securities Act of 1933 or the Securities Exchange Act of 1934, such as Form S-1, Form S-4, Form 10, and Form 8-K.

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