SEC Flash Report: Sample Comment Letter on Disclosures Regarding Russia’s Invasion of Ukraine

The SEC’s Division of Corporation Finance (the “Division”) issued a sample letter detailing potential comments to registrants regarding the impact of Russia’s invasion of Ukraine. The Division noted that companies should provide detailed disclosures, as applicable and to the extent material, of any direct and/or indirect exposure to the registrant as a result of the invasion. While not an exhaustive list, such disclosures may include:

  • exposure to a registrant’s employee base, investments, or reliance on goods or services sourced from the impacted areas;

  • actual or potential disruptions in the supply chain;

  • business relationships or material assets located in the impacted areas;

  • new known trends or uncertainties;

  • changes to critical accounting estimates;  

  • risks related to cybersecurity; and

  • changes in disclosure controls and procedures or internal controls over financial reporting.

Companies should consider the need to reflect such exposure to loss in the financial statements. Financial statement disclosures may include impairment of assets, changes in inventory valuation, deferred tax asset valuation allowance, disposal or exiting of a business, de-consolidation, changes to exchange rates, and changes in contracts with customers or the ability to collect as a result of the conflict.  The staff also reminded registrants not to adjust for estimated lost revenue or exclude normal, recurring cash operating expenses when presenting their non-GAAP financial measures.      


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