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The Morning Ledger: Semiannual Reporting To Benefit Smaller Firms |
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The Securities and Exchange Commission asked the public to comment on the frequency of interim reporting in 2016. PHOTO: ANDREW HARNIK/ASSOCIATED PRESS
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Good morning. When President Trump last month asked financial regulators to consider allowing public companies to report results on a semiannual, rather than quarterly, basis, he said the change would reduce costs and offer greater flexibility. That cost saving -- in terms of audit fees -- is likely to benefit smaller companies more than larger firms, lawyers and accountants said.
For audit costs, size matters: Accelerated and large accelerated filers paid audit fees of $541 per $1 million of revenue to their independent auditors in 2016, the latest full-year data available. By contrast, smaller reporting companies that posted positive revenue in 2016, a group of 1,554 companies, paid $3,345 per $1 million in revenue, according to an analysis from consulting firm Audit Analytics conducted for The Wall Street Journal.
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It's complicated: An external auditor's review of three quarterly filings -- or Form 10-Qs -- in total account for roughly 15% to 20% of the overall audit cost, according to two former audit partners of two large accounting firms. (The fourth quarter results are filed as part of the annual report, which includes the annual audit). However, eliminating two such reviews would not slash two-thirds of the cost, they said, as the mid-year review would be more robust and command higher fees.
Other risks: CFOs could also run the risk of making selective disclosures — sharing non-public information with only a handful of stakeholders — as certain investors ask for additional insights.
“There’s a chance you would be spending more time taking follow-up calls from analysts asking for the more detailed information they’re used to seeing in the 10-Q,” said Keith Higgins, former director of the Securities and Exchange Commission's division of corporation finance.
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A Volkswagen plant in Emden, Germany. The auto company is sitting on a cash pile of $31.7 billion. PHOTO: FABIAN BIMMER/REUTERS
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Finance chiefs at European, Middle Eastern and African companies have a luxury problem: figuring out how to spend $1.1 trillion in cash, CFO Journal's Nina Trentmann reports.
The top cash hoarders in the region are Total SA with €29.2 billion ($33.9 billion), Electricite de France SA with €28.3 billion and Volkswagen AG with €27.3 billion, according to a report by Moody’s Investors Service. The data covers 757 nonfinancial companies based in Europe, the Middle East and Africa and showed cash levels reached a seven-year high at the end of 2017.
Many of these firms have started returning billions to investors through stock buybacks and dividends, as well as plowing their money into new capital projects and deals. The spending spree is unusual for European finance chiefs, who are often more fiscally conservative than their American counterparts.
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Workday Inc. and Restoration Hardware Holdings, Inc. report earnings later today.
The Institute for Supply Management will release its August U.S. manufacturing index at 10 a.m. EDT. Economists surveyed by the WSJ expect the factory activity gauge to tick down to 57.5 from 58.1 in July.
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Stocks: U.S. stocks are set to re-open after a holiday with modest gains as global markets were broadly steady. Still, U.S. stocks are back at all-time highs after a dizzying August rally, prompting some investors to fear a reckoning heading into what historically has been a weak stretch for markets.
Currencies: The dollar extended a five-day rally and futures pointed to a 0.1% opening rise for the S&P 500 ahead of the Institute for Supply Management’s August manufacturing index. The pound fell after the latest U.K. purchasing managers’ index on construction activity fell to 52.9 in August, well below July’s 55.8 and below expectations cited by analysts for a smaller fall to 54.9.
Crude oil: Oil prices were up 1.9% at $71.13 a barrel amid a looming tropical storm in the Gulf Coast and concerns about risks to Iranian supply from U.S. economic sanctions.
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Wednesday: The Bank of Canada is due to release a policy statement. Analysts have been divided on whether the central bank will raise rates again, with solid economic data offset by uncertainty over Canada’s future in the North American Free Trade Agreement.
The U.S. Commerce Department will publish international trade data for July, with the trade gap expected to widen to $49.2 billion from $46.35 billion in June.
Also Wednesday, Facebook Inc. COO Sheryl Sandberg, Twitter Inc. CEO Jack Dorsey and a representative of Google, as yet unconfirmed, are due to testify before the U.S. Senate Intelligence Committee.
Friday: The U.S. Labor Department will publish the August jobs report after a sluggish month of job growth and a falling unemployment rate in July. Economists expect the unemployment rate will have ticked down to 3.8% , while non-farm payrolls rose 190,000 in August.
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Understanding the role of Twitter CEO Jack Dorsey in making content decisions is crucial, as Twitter tries to become more transparent to its 335 million users, as well as lawmakers. PHOTO: RICHARD DREW/ASSOCIATED PRESS
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Twitter Inc. Chief Executive Jack Dorsey will likely be asked who decides whether a user gets kicked off the site when he goes to testify will testify before the Senate Intelligence Committee on Wednesday. Mr. Dorsey's role in this process is a mystery, even to some Twitter employees.
WPP PLC named Mark Read as chief executive Monday, tapping a company veteran in a push for continuity at the world’s largest ad firm after the departure of founder Martin Sorrell.
A broad reordering of the $3.5 trillion U.S. retail industry means that as sales boom stores that have learned how to match the ease and instant gratification of e-commerce shopping are flourishing, while those that have failed to evolve are in bankruptcy or on the brink, reports the New York Times.
JD.com Inc. Chief Executive Liu Qiangdong denies any wrongdoing in connection with his arrest on suspicion of sexual misconduct in Minneapolis, and it’s likely no charges will be filed, his attorneys said Monday.
Nike Inc. will feature Colin Kaepernick, the National Football League quarterback who led player protests during the national anthem, in a new advertising campaign, a move that joins one of the NFL’s biggest business partners with a controversial star who is engaged in a high-profile legal battle with the league.
Carrefour SA, Europe’s largest retailer, named the head of yogurt maker Danone SA to its food advisory committee that the supermarket group is setting up as it seeks to boost sales of organic products, reports Reuters.
Canada’s five biggest banks, which dominate the country’s banking and wealth-management sectors, have been looking south for more growth and diversification. Third-quarter results indicate the initiatives are paying off as U.S. operations give earnings a boost.
Three of Abu Dhabi's state-linked banks are in talks to combine into an institution with $110 billion of assets, according to Abu Dhabi Commercial Bank PJSC, one of the lenders, as the Gulf state jockeys to stay competitive in the era of lower oil prices, reports Bloomberg.
Boeing Co. is facing a problem as it races to meet demand for single-aisle, fuel-efficient jets: where to store unfinished 737s piling up at a factory near Seattle as the world’s biggest aircraft manufacturer by sales tries to make enough of its new jets to meet fast-growing demand.
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A Sherwin-Williams store in Canada PHOTO: DALE WILCOX/ASSOCIATED PRESS
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Sherwin-Williams Co. is fighting a California court ruling that ordered it and two other companies to collectively pay hundreds of millions of dollars in damages for promoting lead paint over several decades, when they allegedly knew or should have known it was hazardous.
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Société Générale SA expects to pay roughly 1.2 billion euros ($1.39 billion) in penalties to settle an outstanding dispute with U.S. authorities over transactions that involve countries subject to sanctions.
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Mario Draghi, president of the European Central Bank, takes questions from journalists during the ECB rate decision news conference in Frankfurt on July 26. PHOTO: ALEX KRAUS/BLOOMBERG NEWS
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Inflation in the 19 countries that use the euro cooled slightly in August, while the number of people out of work fell during July, developments likely to reinforce the European Central Bank’s cautious approach to dialing back monetary stimulus.
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President Trump this week will put his bare-knuckles negotiating strategy to a new test, as his aides resume efforts to persuade Canada to sign on to his vision for overhauling the North American Free Trade Agreement, the pact he has long branded a disaster.
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Autonomous driving technology could replace some 294,000 long-distance truck drivers over the next 25 years, a lighter impact than some have predicted but one that could still significantly reshape freight-industry employment, according to a new research paper.
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China’s President Xi Jinping pledged $60 billion in financing for Africa’s development and waived some debt owed by the continent’s poorest countries, batting away criticism that Chinese investments may be exacerbating a looming African debt crisis.
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Coal is clinging to the top spot in power generation, accounting for as much of the world’s electricity as it did two decades ago, despite heightened concerns about climate change and a slowdown in financing for projects involving the dirtiest of fossil fuels.
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