Based on the comments submitted in April 2020 in response to the proposal (see, one of the most controversial changes revolves around what should be included in the Management’s Discussion and Analysis (MD&A).

The CFA Institute and the Council of Institutional Investors, for example, warned that eliminating such things as the five-year selected financial data, supplementary financial data and contractual obligations tables, and off-balance sheet exposures section “would result in a net loss of important information to investors” and is “a major step backward.”

Prat Bhatt, chairman of the Committee on Corporate Reporting at Financial Executives International (FEI), had no problem with eliminating the five-year data tables. “Additionally, we agree that the incremental utility of having a full five years of selected financial information is not justified by the cost to prepare such disclosures,” he wrote to the SEC. FEI also supports the SEC’s proposed elimination of the contractual obligations disclosure requirement because material obligations are already required to be disclosed.

One of the possibilities, technically, that could be included in a final rule is a requirement that the MD&A be structured in an Inline XBRL (eXtensible Business Reporting Language) format. The question there is whether the MD&A should be structured using block tags, detail tags, or some combination of the two, and what would be the costs involved.

Campbell Pryde, president and CEO of XBRL US, supported block tagging. “The cost and effort involved would be minimal for issuers because they already have the tools and the processes to prepare XBRL-formatted data,” he wrote. “The benefit to investors, companies conducting peer analysis, and other data users, however, would be significant, outweighing the additional effort.”

There is strong support generally for the SEC’s jettisoning of the current prescriptive Reg. S-K requirements. “We strongly support eliminating the prescriptive disclosures regarding selected financial data, off-balance sheet arrangements, contractual obligations and the impact of inflation required by Items 301, 302 and 303 of Regulation S-K,” stated John Merino, corporate vice president and principal accounting officer at FedEx Corp.

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