How do you handle a mistake in a Form 10-Q? That depends on the type of mistake it is – and sometimes, the level of the mistake’s materiality. Sometimes companies may feel the need to amend their Form 10-Q – and the reasons for doing so are all over the map. It could be as simple as forgetting a signature or an exhibit. Even an omission can be a mistake.
When you figure out a mistake has been made, you uncover it (and hope you’re not the reason for it), and then you assess what type of mistake it is. If it’s missing something that’s absolutely required, like a signature or a CEO/CFO certification, that’s something that clearly needs to be fixed. There’s no materiality analysis.
But maybe it’s more on the trivial side – a typo that doesn’t change the meaning of a word, of a sentence, of a concept. In that case, many practitioners don’t bother fixing the mistake. But note that a single typo might cause you to file an amendment. It depends on the materiality of the mistake.
Assuming you’ve decided to fix an error, how do you go about doing that?
- Cover page – Rule 12b-15denotes that the cover page must brand the filing with a “Form 10-Q/A” at the top. Companies also are required under 12b-15 to indicate how many times that particular 10-K has been amended underneath that “Form 10-Q/A” label.
Otherwise, the cover page is the same as the original filing, except some companies update the number of shares of common stock outstanding to a more practicable date. - Explanatory note – The page after the cover page indicates why the amendment is being filed with an explanatory note, which is often relatively brief.
- Piecemeal updating – Amendments must set forth the complete text of each item amended that’s in Rule 12b-15. You aren’t required to include the full boat of items in the 10-Q that aren’t touched, although you can do that voluntarily if you wish.
If you happen to forget to file an exhibit, the fix normally is including the exhibit in your next periodic report, unless it’s something that is quite material. - Date of which the amendment speaks – Other than fixing the mistake, should companies update the disclosure when they amend their Form 10-Q? I’m not aware of SEC staff authority for that belief, and many practitioners follow the practice that an amended filing speaks as of the date of the original filing.
The fact that you’re permitted to address just those items of the 10-Q impacted by the mistake and not include the entire 10-Q seems to back up that belief. Perhaps you want to include a note that clearly states that the 10-Q is not being updated entirely. - Signature – The amendment is only required to be signed by a duly authorized officer of the company under Rule 12b-15.
- CEO/CFO certifications – For an amended 10-Q, you’re always going to need to file a new set of Section 302 CEO/CFO certifications (those are the certifications required by the SEC’s rules), but you only need a new set of Section 906 certifications (the ones required by the DOJ) if the financials have changed. The Section 302 certifications for the amended filing might be permitted to be abbreviated if there are no financials in the amended 10-Q.
So if you have to amend your 10-Q, you need to file at least an abbreviated set of 302 certifications – that’s even if only one of the CEO or CFO is actually signing the 10-Q itself. You still need a new 302 certification from both the CEO and CFO.
Speaking of CEO/CFO certifications, note that you will need to file an amendment to the 10-Q if the 302 or 906 certifications don’t exactly mirror the language in Item 601(b) of S-K. Depending on the error, you may need to accompany the revised certification(s) with the entire 10-Q (see Regulation S-K C&DI 246.14). The Corp Fin staff issues comments like this all the time – in fact, it’s probably the biggest reason why companies have to amend their 10-Qs: certification language errors.
Authored by
Broc Romanek