PwC's accounting podcast Inside SEC reporting: Pro forma financial information
May 20, 2025
In this insightful discussion, guest Scott Feely, a partner at PwC’s National Office with deep expertise in SEC and financial reporting, dives into the complexities of pro forma financial information. He explores when pro formas are required, covering transactions like acquisitions and bankruptcies. Scott explains the significance threshold, the different types of adjustments allowed, and the presentation intricacies involved. He also discusses the auditor's perspective on these reports and offers practical reminders for compliance. A must-listen for anyone in capital markets!
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When Pro Formas Are Required
- Article 11 of Regulation S-X defines when SEC pro forma financial information is required for acquisitions, divestitures, spinoffs, bankruptcies, and other material transactions.
- Treat the FRM as guidance but apply the 2020 Rule updates and Article 11 for current practice.
Significance Relies On Three Tests
- Significance uses three tests: investment, asset, and income, and you take the highest result to determine scope.
- Watch the 20% threshold as the practical cutoff between significant and not significant.
File Pro Formas In 8‑K And Transaction Docs
- For filings, include pro forma financial information in 8-Ks for consummations and in transactional documents like registration or proxy statements.
- Time your 8-K submission within four business days of consummation and follow filing-specific timing rules.