Academic journal article Journal of Accountancy

SEC Urges Year 2000 Disclosure

Academic journal article Journal of Accountancy

SEC Urges Year 2000 Disclosure

Article excerpt

The Securities and Exchange Commission is requiring companies to disclose substantial year 2000 (Y2K)-related computer costs. In staff legal bulletin no. 5, issued in January, the SEC Divisions of Corporation Finance and Investment Management said a company should disclose Y2K issues if they are material to its financial condition regardless of whether remediation programs or contingency plans are in place. The requirements are effective for 1997 company filings.

Most existing computer programs use only two digits to identify the year. If these programs are not updated, many computer applications could fall by or at the Y2K. For example, Chase Manhattan Bank and BankAmerica Corp. plan to spend more than $200 million each to be Y2K-compliant.

The staff bulletin, originally published in October 1997, was amended to include specific guidance, including the requirement that companies include either of the following in their management's discussion and analysis:

* The cost of Y2K compliance if it is a material event or uncertainty that would cause reported financial information not to be necessarily indicative of future operating results or financial condition.

* The cost or consequence of incomplete or untimely Y2K compliance if it represents a material event or uncertainty that is expected to affect future financial results or cause reported financial information not to be necessarily indicative of future operating results or financial condition. …

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