Upfront: SEC Deadlines - and Filers - Speed Up

The number of quarterly filings that were submitted late decreased during the second quarter of this year to 30 companies, from 36 in the first quarter. Corporations are striving mightily to avoid extra scrutiny from investors, who may view delays in financial report filings as indicative of broader problems.

A recent study by San Francisco-based institutional research firm Glass, Lewis & Co. LLC points out that the number of late filers so far this year is well below last year's figure. In 2003, 49 companies missed their filing deadlines in each of the first two quarters.

These declines come despite shorter deadlines for all companies that have public floats of more than $75 million and have previously filed an annual report with the SEC. Organizations that meet those criteria must now submit their quarterly reports within 40 days of the period end, down from 45 days last year. Next year the time frame will shrink to 35 days. If a company fails to file within a five-day extension period, it's out of compliance with SEC regulations; consequences may include failing to comply with bank loan covenants or delisting from stock exchanges.

Although fewer businesses are filing late this year than did in 2003, companies are pressuring the SEC and accounting firms to postpone a new rule, scheduled to go into effect this December, that would accelerate the filing deadline for annual reports from 75 days to 60 days after year-end.

The SEC further stretched finance departments in public companies when, this August, it added 10 new corporate events to the list of triggers that cause companies to be required to file an 8-K. Previously, 12 events triggered form 8-K filings, including a change in the organization's accountant, a bankruptcy-protection filing, a director resignation and a change in the organization's fiscal year. New events that make the 8-K mandatory include a financial restatement and delisting from a stock exchange. The SEC told The Wall Street Journal that it expects an additional 60,000 8-K filings each year as a result of the change -- and it expects them faster. Businesses must generate 8-K reports for most events within four business days, rather than the five business days or 15 calendar days they were allowed before.