The SEC's Division of Corporation Finance (Corp Fin) released a long-awaited update to its Financial Reporting Manual (FRM) in late January. The updates are effective as of Dec. 31, 2022, and address several matters. This is the first update to the FRM since November 2020.

Originally developed as a collection of internal staff guidance, the FRM was first published on the SEC website in 2008. Although the SEC is careful to note that the FRM is intended to serve as a collection of informal, non-authoritative guidance, it serves for many as a key resource for how the agency analyzes important issues involving accounting and disclosure conclusions.

Unfortunately, Corp Fin staff did not provide hoped-for updates to existing guidance on financial statements for acquired businesses (i.e., the significance tests in Rule 3-05 of Regulation S-X, which generally requires separate audited annual, and unaudited interim, pre-acquisition financial statements of an acquired or to-be-acquired business). Nevertheless, the updates are important, particularly for companies with financial guarantors.

Below, you'll find a bird's-eye view of the updated topics helpfully hyperlinked to the relevant portion of the FRM, and here you will find our changed-page-only redline of the modifications from the staff's prior update.

The SECond Opinions Blog will continue to monitor the agency's activity in this space and provide further updates.