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Mind your manners: etiquette can go a long way toward getting results with the SEC.

Etiquette can go a long way toward getting results with the U.S. Securities and Exchange Commission. You can reach more business goals when you work in cooperation with the SEC rather than take an adversarial approach.

If you are a CFO or director of finance at a public company, consider these six tips for working effectively with the SEC.

1. Ask the SEC official for help with resolving an issue. When a complex issue arises, such as recognizing income, it often helps to invite the SEC official to take part in creating a solution. If you work in this fashion, the SEC will be aware of your approach from the start. Also, hearing the views of the SEC staff may actually help you strengthen your position prior to taking action and minimize the surprises for both sides.


Keep in mind that the SEC staff may have an education and background that is similar to yours, so you may have more in common than you think. While the SEC staff realizes that many issues are not black or white, these professionals quickly sense when an accounting method does not smell right.

2. Provide as much information as possible. Even if the information does not necessarily support your position, present all you can. By sharing everything, you increase your credibility with SEC officials.

Support your position by citing generally accepted accounting principles and referring to standard industry practices. You also can help your case by sharing opposing viewpoints and giving your reasons for disregarding them.

In short, don't give the SEC the impression that you are showing only what you want them to see. If SEC officials believe that you are holding back, that belief will bring out a natural inclination for them to dig in like a terrier.

3. Put it in writing. You would be surprised at how many companies communicate with the SEC in a haphazard manner. Public companies can't afford to make sloppy mistakes. Many CFOs, when faced with issue and time pressures, make an informal call to the SEC's Department of Corporate Finance. You want to define the issue carefully and succinctly. Phone discussions have a tendency to change after the fact, so if you want a decision to be binding, put it in writing and ask the SEC to respond with an acknowledgement.

Remember, a verbal opinion is worth the paper it is written on. To expedite matters, offer to summarize the results of your conference and share it with them.

4. Follow procedures. Every culture has etiquette and procedures, and the SEC is no exception. Present your information in the manner that is most convenient for the SEC official. If you want a prompt answer, lay out the supporting arguments in detail. If you do not include information that the SEC considers relevant, the SEC official will not have adequate information to form a response.

For information on the format that is preferred by the SEC, visit

5. Communicate your desire to do the right thing. I have observed many confrontations between public company financial executives and the SEC. (I have also witnessed similar confrontations between the auditors of public accounting firms and the SEC.) In most cases, being unnecessarily aggressive with the SEC official hurts your ability to handle a situation quickly and cost-effectively.

When you clearly express your desire to do the right thing and act cooperatively, you promote trust--which can lead to a positive outcome.

6. If you disagree with the SEC official, ask for a second opinion. There is nothing wrong with disagreeing with the SEC.

I attended a conference a few months ago that featured a presentation by Robert Bayless, associate chief accountant at the SEC's Division of Enforcement. Bayless shared the challenges faced by the SEC in dealing with the issues of public companies. "There are some times that we just don't get it," he told the audience. If you feel that the reviewer just doesn't get your position, let the person know that you wish to take it up the chain of command. In 30 years of practice, I have not always gotten the answer I wanted, but I have always been given a fair hearing.

We are all on the same side. The government believes in proper financial reporting and, as CPAs and financial executives, so do we. By focusing on effective communications with the SEC, you set the stage for best practices. Further, by continuously honing your approach in dealing with the SEC, you can gain a more timely resolution of the issues at hand.


Sam Wild, CPA leads the Stonefield Josephson Public Companies Group. Stonefield Josephson is a California-based public accounting and business advisory firm. You can reach Wild at (310) 566-4342 or

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Title Annotation:SECCommunications
Author:Wild, Sam
Publication:California CPA
Geographic Code:1USA
Date:Jan 1, 2004
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