The SEC Division of Corporation Finance (the "Division") offered additional guidance to companies on "disclosing the effects and risks of COVID-19."
In the new guidance, the Division emphasized that the disclosures should "enable an investor to understand how management and the Board of Directors are analyzing the current and expected impact of COVID-19 on the company's operations and financial condition, including liquidity and capital resources."
The Division urged each firm to assess:
the material operational obstacles monitored by management and/or a firm's Board of Directors and the extent to which it has altered operations to deal with such obstacles;
its overall liquidity position and the extent to which COVID-19 has material impacts regarding sources and uses of funds;
use of revolving lines of credit or capital-raising to address liquidity needs;
how access to traditional funding has been affected by COVID-19;
the material risks of not being able to satisfy covenants in credit agreements;
the clarity of any information provided on metrics included in disclosures regarding how the firm's management uses such metrics to monitor liquidity;
reductions in capital expenditures, if applicable;
the ability to service debt and other obligations in a timely manner;
alterations in customer term agreements and the impact on the firm's financial conditions;
reliance on supplier finance programs to manage cash flow;
the impact of material events that occurred after the end of the reporting period;
the short- and long-term impact of any federal loans received under the CARES Act on its financial condition, liquidity and capital resources;
the material terms and conditions of any federal loans received under the CARES Act;
the impact of any recent tax relief on short- and long-term liquidity, if applicable; and
any conditions and events that give rise to "substantial doubt" about the company's ability to continue as a going concern.