Hot Topic | February 2021



SEC adopts further changes to Regulation S-K

Updated: The SEC adopts amendments to modernize MD&A and other financial disclosures.


SEC Release No. 33-10890 ; 34-90459; IC-34100; File No. S7-01-20

  • Public companies

Relevant dates

  • Became effective on February 10, 2021.
  • Application is required beginning in the fiscal year ending on or after August 9, 2021 (e.g. year ending December 31, 2021 for calendar year-end companies).
  • Early application (in filings after the effective date) is permitted if companies comply with the amended item in its entirety. 
  • For example, a calendar year-end company may immediately cease providing ‘Selected Financial Data’ disclosures required by former Item 301 in its Form 10-K for the year ended December 31, 2020, if filed after February 10, 2021.

Key impacts

As part of the SEC’s ongoing evaluation of disclosure requirements, the adopted amendments are intended to modernize, simplify and enhance financial disclosures. They eliminate the requirement to disclose selected financial data, and amend supplementary financial information disclosures and MD&A presentation.

The amendments to supplementary financial information and MD&A, among other things: 

  • Replace the requirement to disclose two years of quarterly information with a principles-based requirement to disclose ‘material retrospective changes’.
  • Add a new Item 303(a) that articulates the objectives of MD&A for both fiscal years and interim periods.
  • Emphasize a principles-based approach to liquidity and capital resources disclosures focused on material short- and long-term cash requirements, while also requiring disclosure of material cash requirements from known contractual and other obligations.
  • Replace the requirement to discuss off-balance sheet arrangements under a separate caption with a principles-based instruction.
  • Eliminate tabular disclosure of contractual obligations, in light of the changes to liquidity and capital resources disclosures.
  • Eliminate the requirement to discuss inflation and the impact of changing prices.
  • Incorporate a disclosure requirement over critical accounting estimates to clarify and codify existing interpretive guidance.
  • Revise interim disclosure requirements to allow registrants the flexibility to compare current quarter’s financial information to either the corresponding quarter in the prior year or the prior fiscal quarter.
  • Clarify requirements to disclose:
    • Material cash requirements
    • Known events that are reasonably likely to cause a material change in the relationship between costs and revenues
    • Underlying reasons for material changes in net sales or revenues.

Certain conforming amendments will also apply to Forms 20-F and 40-F. 

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