**GAO-03-463R**                      Feb 19, 2003                  

-   
-   
-   
-   

    Jump To:  
-  Elder Abuse 
-  Services for Older Adults 
-  State and Local-Level Drivers and Trends 
-  State and Local Fiscal Projections 
-  Federal Borrowing 
-  Managing the Debt 
-  Summary of Funding Provisions 
-  Auditing the Government's Books 
-  Unpacking the Financial Report 
-  Highlights 
-  Recommendations 
-  Background 
-  About This Work 
-  About This Work 
-  Trends 
-  About the Center 
-  Why It's High Risk 
-  What Remains To Be Done 
-  Key Reports 
-  Newest COVID-Related Reports 
-  AI Use Cases 
-  Flood Insurance 
-  Past Pandemic-Related Reports 
-  CARES Act Oversight Reports 
-  All COVID-19 Reports 
-  Report Suspected Fraud 
-  Subjects 
-  How to Get Notified 
-  Past Reports 
-  Public Health Threats 
-  Explore the FY 2022 and 2023 Funds 
-  Status of FY22 Projects 
-  Lessons Learned 
-  Agency Reports 
-  Recent Reports 
-  Recommendations 
-  Supplemental Material 
-  Full Report 
-  Additional Data 
-  View Decision 
-  Downloads 
-  Previously Identified Actions 
-  Related Pages 
-  Associated Agencies 
-  Tough Choices and Opportunities Ahead 
-  Americas Fiscal Future Key Areas 
-  Retirement Security Key Areas 
-  Current List 
-  About The High Risk List 
-  Area Ratings 
-  Previous High Risk Products 
-  Search Federal Vacancies 
-  Past Federal Vacancies 
-  Violation Letters 
-  About the Yellow Book 
-  Advisory Council 
-  Related Resources 
-  Comment Letters 
-  Related Publications 
-  Contacts and Resources 
-  Major Issues Facing the Nation 
-  Meeting Strategic Challenges 
-  Additional Resources 
-  Resources 
-  GAO Contacts 
-  Mission Teams 
-  Operations and Staff Offices  
-  Organization Chart  
-  Why a Career at GAO? 
-  Am I Qualified? 
-  Company Culture 
-  Reasonable Accommodations 
-  Video Gallery 
-  Paid Internships 
-  Student Volunteers 
-  Professional Development Program 
-  Advancement 
-  Executive Candidate Program 
-  Summer Associates 
-  Externships 
-  Benefits 
-  Contacts 

Skip to Highlights

## Highlights

GAO reviewed the Securities and Exchange Commission's (SEC) final rule on off-balance sheet arrangements and aggregate contractual obligations disclosure. GAO found that (1) the rule implements section 401(a) of the Sarbanes-Oxley Act of 2002 and requires the disclosure of off-balance sheet arrangements, (2) the rule would require a registrant to provide an explanation of its off-balance sheet arrangements in a separately captioned subsection of the "Management's Discussion and Analysis" section of a registrant's disclosure documents, and (3) SEC complied with applicable requirements in promulgating the rule.

##  Securities and Exchange Commission: Disclosure in Management's Discussion and Analysis About Off-Balance Sheet Arrangements and Aggregate Contractual Obligations, GAO-03-463R,February 19, 2003

B-291941February 19, 2003The Honorable Richard C. Shelby     Chairman     The Honorable Paul S. Sarbanes     Ranking Minority Member     Committee on Banking, Housing, and Urban Affairs     United States SenateThe Honorable Michael G. Oxley     Chairman     The Honorable Barney Frank     Ranking Minority Member     Committee on Financial Services     House of Representatives     Subject:*Securities and Exchange Commission: Disclosure in Management's Discussion and Analysis About Off-Balance Sheet Arrangements and    Aggregate Contractual Obligations*Pursuant to section 801(a)(2)(A) of title 5, United States Code, this is our report on a major rule promulgated by the Securities and Exchange    Commission (SEC), entitled Disclosure in Management's Discussion and Analysis About Off-Balance Sheet Arrangements and Aggregate Contractual Obligations (RIN: 3235-AI70).  We    received the rule on January 29, 2003.  It was published in the Federal Register as a final rule on February 5, 2003.  68 Fed. Reg. 5982.     The final rule implements section 401(a) of the Sarbanes-Oxley Act of 2002 and requires the disclosure of off-balance sheet arrangements.  The rule requires a registrant to provide an    explanation of its off-balance sheet arrangements in a separately captioned subsection of the Management's Discussion and Analysis section of a registrant's disclosure    documents.     Enclosed is our assessment of the SEC's compliance with the procedural steps required by section 801(a)(1)(B)(i) through (iv) of title 5 with respect to the rule.  Our review indicates that    the SEC complied with the applicable requirements.            If you have any questions about this report, please contact James W. Vickers, Assistant General Counsel, at (202) 512-8210.  The official responsible for GAO evaluation work relating to the    subject matter of the rule is Thomas McCool, Managing Director, Financial Markets and Community Investments.  Mr. McCool can be reached at (202) 512-8678.                 signed     Kathleen E. Wannisky     Managing Associate General Counsel     Enclosurecc: Margaret H. McFarland     Deputy Secretary     Securities and Exchange Commission     ENCLOSURE     ANALYSIS UNDER 5 U.S.C.  801(a)(1)(B)(i)-(iv) OF A MAJOR RULE     ISSUED BY THE     SECURITIES AND EXCHANGE COMMISSION     ENTITLED     "DISCLOSURE IN MANAGEMENT'S DISCUSSION AND ANALYSIS     ABOUT OFF-BALANCE SHEET ARRANGEMENTS AND     AGGREGATE CONTRACTUAL OBLIGATIONS"     (RIN: 3235-AI70)(i) Cost-benefit analysis     The SEC estimates that the final rule will impose disclosure requirements on 9,850 public companies.  The estimated in-house cost of preparing, reviewing, and filing the disclosure    documents is $45,792,000 and the cost of outside professionals to comply with the requirements is estimated at $44,795,000.     The SEC states that the anticipated benefit of the final rule is to increase transparency of a registrant's financial disclosure and enable investors to make more informed investment decisions    and to allocate capital on a more efficient basis.(ii) Agency actions relevant to the Regulatory Flexibility Act, 5 U.S.C.  603-605, 607, and 609     The SEC prepared an Initial and Final Regulatory Flexibility Analysis in connection with the proposed and final rules, respectively.  The analyses meet the informational requirements of the    Act.     In order to reduce the burden on small entities, small entities have been excluded from the requirement to provide tabular disclosure of contractual obligations.(iii) Agency actions relevant to sections 202-205 of the Unfunded Mandates Reform Act of 1995, 2 U.S.C.  1532-1535     As an independent regulatory agency, the SEC is not subject to title II of the Unfunded Mandates Reform Act.(iv) Other relevant information or requirements under acts and executive orders     Administrative Procedure Act, 5 U.S.C.  551 etseq.     The final rule was issued using the notice and comment procedures contained at 5 U.S.C. 553.  On November 8, 2002, the SEC published a Notice of Proposed Rulemaking in the Federal    Register.  67 Fed. Reg. 68054.  The SEC received responses from 48 commenters, which are discussed in the preamble to the final rule.     Paperwork Reduction Act, 44 U.S.C.  3501-3520     The final rule contains information collections that are subject to review by the Office of Management and Budget (OMB) under the Paperwork Reduction Act.  The required information    regarding the 17 collections, including the burden hours, was published in the proposed rule and the manner in which the SEC arrived at the burden figures is explained in the preamble to the    final rule.  OMB has reviewed and approved the collections that are listed in the preamble to the final rule along with their corresponding OMB control numbers.     Statutory authorization for the rule     The final rule is promulgated under the authority contained at sections 7, 10, 19, 27A, and 28 of the Securities Act; sections 12, 13, 14, 21E, 23, and 36 of the Exchange Act; and sections 3(a)    and 401(a) of the Sarbanes-Oxley Act of 2002.     Executive Order No. 12866     As the rule is promulgated by an independent regulatory agency, it is not subject to the review requirements of the order.

## Downloads

Full Report (4 pages)

## GAO Contacts

### 

Shirley A. Jones
jonessa@gao.gov

(202) 512-5400

## Office of Public Affairs

### Media Inquiries

Sarah Kaczmarek
kaczmareks@gao.gov

(202) 512-4800

### Public Inquiries

Public Affairs
PublicAffairs@gao.gov

(202) 512-4800

## Related Pages

RelatedAppropriations LawRelatedBid ProtestsRelatedDecisions & FAQsRelatedThe Red BookRelatedContract Appeals BoardRelatedFederal Vacancies Reform ActRelatedCongressional Review Act - archivedReceive GAO Updates
    Stay informed as we add new reports & testimonies.  
        U.S. Government Accountability Office           v3.3.27 -  Column 1     -  Press Center 
  -  Contact Us 
  -  Inspector General 
  -  Restricted Reports 
-  Column 2     -  Copyright & Terms of Use 
  -  Privacy Policy 
  -  Accessibility 
  -  Sitemap 
-  Column 3     -  FOIA Requests 
  -  Scam Alerts 
  -  No FEAR Act Data 
  -  Health Care Advisory Committees