A review of recent SEC comment letters filed on EDGAR reveals consistent patterns across industries. Based on that review, the areas generating the most substantive back-and-forth with the Staff are listed below.

Management’s Discussion and Analysis (MD&A): Boilerplate Is Not Acceptable

MD&A ranked as the most frequent comment area in our review, and the Staff’s message is consistent. Describing what happened is not enough. The Staff wants to know why, in quantitative terms, for each material factor.

The letters reviewed pushed companies to quantify every driver of period-over-period changes in revenue, gross profit, research and development, and selling, general, and administrative expenses, including offsetting factors. Saying “revenue increased due to higher volume and favorable pricing” without quantifying each component draws a comment. The Staff called out companies that described multiple contributing factors but failed to attribute dollar amounts or percentages to each.

Liquidity and capital resources discussions drew similar attention. The Staff asked companies to go beyond sources and uses of cash, pushing for discussion of known trends and uncertainties, including the impact of the interest rate environment and macroeconomic pressures on future results. For companies with a history of operating losses, the Staff required explicit discussion of the path to profitability and expected timeline. For companies with significant research and development spend, a breakout of costs by program or product type was expected.

Investors deserve an MD&A that reflects how management actually thinks about the business and not one drafted to just satisfy a checklist. Companies that treat it as a genuine communication tool tend to get through the comment process with far less friction.

Read your MD&A as if you were an investor who knows nothing about your business. If a material line item changed and the explanation does not include a quantified breakdown of each driver, including offsets, as the Staff will ask for it.

Non-GAAP Financial Measures: The SEC Is Not Letting This Go

Non-GAAP financial measures remain the most common comment area after MD&A, and the Staff is getting more specific in its pushback.

The letters reviewed flagged forward-looking non-GAAP guidance without reconciliations, EBITDA tables that started with the non-GAAP number rather than GAAP net income, and vague reconciling line items with no quantification. In one letter, the Staff challenged an $18 million “Other” adjustment described only as “items not indicative of ongoing business” and demanded a breakdown of each component. In another, the Staff questioned whether a large inventory charge was truly non-recurring, requiring the company to explain why the goods could not have been sold to another customer or put to alternative use.

Some companies appear to use non-GAAP measures to obscure rather than illuminate performance. The more an adjustment looks designed to improve reported results rather than aid understanding, the more attention it will draw.

If your non-GAAP reconciliation starts with anything other than the most comparable GAAP measure or contains a catchall “Other” line, fix it before the Staff finds it.

Segment Reporting: ASU 2023-07 Is Generating a Wave of Comments

Segment reporting appeared in nearly a quarter of all reviews with comment letters in the period reviewed, up from the prior year. ASU 2023-07 became effective for calendar-year public companies in early 2025, and the Staff is actively checking implementation.

In one letter reviewed, a company argued that segment-level cost of sales was not tracked and therefore did not need to be disclosed. The Staff disagreed. Because the CODM regularly reviewed gross profit and net sales by segment, cost of sales was “easily computable” and had to be evaluated for disclosure. In another letter, a company presented an “All Other” column in its segment table. The Staff said it should be a reconciling item, not a separate column. The Staff is also comparing earnings call transcripts and investor presentations against reported segment structures and flagging inconsistencies.

The Staff has shown a willingness to challenge conclusions companies have held for years, particularly around what constitutes a single reportable segment. A company that describes its business in geographic or product terms on earnings calls but reports as one segment in its financials is creating an inconsistency the Staff is likely to notice. The standard has not changed, but the scrutiny has increased.

Review what your CODM actually sees. If a metric can be derived from information regularly provided to the CODM, the Staff will argue it needs to be disclosed, whether or not it is tracked as a standalone line item.

Revenue Recognition: ASC 606 Disclosures Are Under the Microscope

The SEC is questioning whether companies disclose ASC 606 properly.

In one letter reviewed, the Staff required a company to quantify the transaction price allocated to each unsatisfied performance obligation as of period end and explain when the remaining revenue would be recognized, rather than simply disclosing a total deferred revenue balance. In another, a company disclosed that more than half of contracted revenue would be recognized in the next 12 months and “the remaining thereafter.” The Staff required quantitative time bands or a qualitative explanation for the remainder. A third letter asked whether service and licensing revenue exceeded 10% of consolidated revenue and, if so, required separate income statement presentation.

The Staff is also pressing on how revenue is disaggregated. Letters reviewed required separate income statement presentation when a category of revenue such as service or licensing revenue exceeded 10% of consolidated revenue. In other letters, the Staff asked companies to explain whether revenue growth was coming from new customers or existing ones, and the Staff pushed back when companies could not or would not quantify the difference. Geographic revenue disclosure drew similar attention, with the Staff flagging cases where U.S. revenue was not separately presented despite being material. The common expectation across all of these is that disaggregated revenue disclosures should reflect how management views and runs the business, not simply satisfy a minimum threshold.

Many companies implemented ASC 606 but never went back to ask whether their disclosures actually tell investors what they need to know. Deferred revenue footnotes in particular tend to be written once and left alone. The Staff is reading them carefully and finding gaps.

If you have collaboration agreements, multi-element arrangements, or significant deferred revenue, your footnotes should allocate transaction price by performance obligation with expected recognition timing, not just report a total balance.

Goodwill Impairment: The Staff Wants Specificity, Not Boilerplate

Goodwill disclosures continue to attract detailed, multi-part comments, particularly when impairment has occurred or conditions suggest it may.

The letters reviewed required companies to identify the valuation methods and key assumptions used, explain any changes in methodology between periods, disclose the number of reporting units, and state whether any units are at risk of failing the impairment test, including how close fair value is to carrying value. In one case, a company used a discounted cash flow analysis in one period and switched to a market capitalization approach in the next. The Staff wanted to know why.

Higher discount rates have been compressing fair values across industries for two years, pushing more reporting units closer to their impairment thresholds. Companies that wait for an actual impairment charge before addressing this in their disclosures will find themselves answering not just for the charge but for why the risk was not flagged sooner.

If any reporting unit is approaching its impairment threshold, consider disclosing the valuation methods, key assumptions, and how close fair value is to carrying value before the Staff raises the question.

What to Watch: Emerging Areas of SEC Focus

Beyond the areas identified above, three topics worth monitoring in upcoming review cycles are artificial intelligence, cybersecurity, and macroeconomic risk.

Artificial Intelligence

Companies should disclose the material risks AI poses to their business, including exposure to regulatory changes, model errors, data privacy issues, and reliance on third-party providers. Risk factor language that reads as though it was written for any company in any industry will not hold up to scrutiny.

Cybersecurity

Companies should disclose the material risks a cybersecurity incident poses to their specific business, including operational disruption, data breaches, and the adequacy of existing controls. Letters reviewed flagged companies that omitted required cybersecurity disclosures entirely. As the Staff becomes more familiar with these disclosures, expect attention to shift from omission to the quality of what is disclosed.

Macroeconomic Risk

Companies should disclose the specific effects that inflation, interest rate volatility, and global trade uncertainty are having or could have on their business, including quantifiable impacts on revenue, margins, and liquidity. A general statement that macroeconomic conditions may affect results is not what the Staff is looking for.

The Bottom Line

The SEC’s comment letter review process is active and focused. MD&A, non-GAAP, segment reporting, revenue recognition, and goodwill are where the attention is concentrated, with AI, cybersecurity, and macroeconomic risk worth watching as the review cycle continues.