FYI: Starting with a letter issued on November 22, 2019, the Chief Accountant’s Office of the Division of Investment Management has revived its practice of issuing ‘Dear CFO’ letters from time to time, addressing matters relating to accounting, auditing, financial reporting and related disclosure for investment companies and BDCs.
Numerous ‘Dear CFO’ letters were issued in the period from November 1994 to February 2001, but since then accounting matters have been addressed by the SEC Staff via other means, such as IM Guidance Updates, IM Information Updates, Accounting and Disclosure Information publications and IM Staff Issues of Interest, as well as in correspondence with the AICPA and no-action letters issued to registrants. By reviving the practice of issuing ‘Dear CFO’ letters, the Staff believes its current views on accounting matters can be conveyed to all registrants in a consistent and transparent manner.
The November 22 ‘Dear CFO’ letter modifies or rescinds a number of prior accounting positions and explains the rationale for these changes. It also adds one entirely new position addressing the methods funds may use to calculate and notify investors about distributions that fall under Section 19(a) of the Investment Company Act (distributions from any source other than the fund’s net income). The letter also says the Staff is continuing to consider whether additional accounting positions should be rescinded, modified or supplemented, or whether new positions should be issued.
In conjunction with issuing the November 22 ‘Dear CFO’ letter, an ‘evergreen’ bibliography was posted to the Division’s website, serving as a cumulative listing of current Staff positions on accounting matters and indicating which prior positions have been rescinded, modified or supplemented.
Dear CFO Letter dated November 22, 2019: https://www.sec.gov/files/industry-comment-letter-112219.pdf.
IM Accounting Matters Bibliography: https://www.sec.gov/investment/accounting-matters-bibiography.
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