Form 10-K Summary PRA Supporting Statement

SUPPORTING STATEMENT FOR INTERIM FINAL RULES
UNDER THE SECURITIES EXCHANGE ACT OF 1934
This submission, pursuant to the Paperwork Reduction Act of 1995, 44 U.S.C.
§3501, et seq., consists of this supporting statement and the following attachments:

A.

JUSTIFICATION

1.

CIRCUMSTANCES MAKING THE COLLECTION OF INFORMATION
NECESSARY

On June 1, 2016, the Securities and Exchange Commission (the “Commission”)
adopted an interim final amendment to Form 10-K under Securities Exchange Act of
1934 (the “Exchange Act”). The interim amendment implements Section 72001 of the
FAST Act,1 which became law on December 4, 2015. Section 72001 of the FAST Act
directs the Commission, not later than 180 days after the date of enactment, to issue
regulations to permit “issuers” to submit a “summary page” on Form 10–K, but only if
each item on such summary page includes a cross-reference (by electronic link or
otherwise) to the material contained in Form 10–K to which such item relates. A copy of
Commission Release No. 34-77969, which contains the interim amendment, is attached.
2.

PURPOSE AND USE OF THE INFORMATION COLLECTION

The interim final amendment amends Form 10-K to explicitly allow a registrant,
at its option, to include a summary in its Form 10-K. Each disclosure topic included in
the summary is required to contain a hyperlink to the related, more detailed disclosure
item in the Form 10-K.
3.

CONSIDERATION GIVEN TO INFORMATION TECHNOLOGY

The collection of information requirements of the amendment is set forth in Form
10-K. This form is filed electronically with the Commission using the Commission’s
Electronic Data Gathering, Analysis and Retrieval system.
4.

DUPLICATION OF INFORMATION
The amendment does not duplicate, overlap, or conflict with other federal rules.

5.

REDUCING THE BURDEN ON SMALL ENTITIES

The amendment may potentially affect all registrants subject to Section 13 or
15(d) of the Exchange Act that are required to file an annual report on Form 10-K.
1

Pub. L. No. 114-94, 129 Stat. 1312 (Dec. 4, 2015).

However, given that current Commission rules do not prohibit a registrant from
voluntarily preparing a summary, the Commission expects that registrants that do not
currently include a summary in their Form 10-Ks will not likely begin to do so in
response to the amendment. Accordingly, the amendment should not have a significant
economic impact on small entities.
6.

CONSEQUENCES OF NOT CONDUCTING COLLECTION

Form 10–K was adopted under the Exchange Act and sets forth the disclosure
requirements for annual reports filed by registrants to help investors make informed
investment decisions. Less frequent collection would deprive investors of access to
information that is important to their voting and investment decisions.
7.

SPECIAL CIRCUMSTANCES
Not applicable.

8.

CONSULTATIONS WITH PERSONS OUTSIDE THE AGENCY

The Commission has amended Form 10-K several times since its adoption. The
Commission did not solicit comment on the amendment.
9.

PAYMENT OR GIFT TO RESPONDENTS
Not applicable.

10.

CONFIDENTIALITY
Not applicable.

11.

SENSITIVE QUESTIONS

No information of a sensitive nature would be required under this collection of
information. The information collection collects basic Personally Identifiable
Information (PII) that may include name, business address, and residential address (for
sole proprietor only), telephone/cellular/facsimile number, email address, and Tax ID
Number (TIN). The information collection is covered under the System of Records
Notices (SORN), which may be found at the following link:
https://www.sec.gov/about/privacy/sorn/secsorn6.pdf. The Privacy Impact Assessment
(PIA) is provided as a supplemental document.
12. and 13.

ESTIMATE OF HOUR AND COST BURDENS

The interim amendment will increase the burdens and costs for registrants that
elect to prepare a summary. We derived our burden hour and cost estimates by
estimating the average amount of time it would take a registrant to prepare and review the

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summary, as well as the average hourly rate for outside professionals who assist with
such preparation. We estimate that the average incremental burden for a registrant to
prepare a summary would be 50 hours. This estimate represents the average burden for
all registrants, both large and small. Based on an analysis of two samples of Form 10-K
filings, it appears that the use of a summary in Form 10-Ks is currently extremely limited,
and we anticipate that registrants that do not currently include a summary in their Form
10-Ks will not likely begin to do so in response to the amendment. For purposes of the
Paperwork Reduction Act analysis we estimate that 10% of Form 10-K filers would elect
to prepare a summary. However, the exact number of registrants that would choose to
prepare a summary is uncertain.
The table below shows the total annual compliance burden, in hours and in costs,
of the collection of information resulting from the interim final amendment.2 The burden
estimates were calculated by multiplying the estimated number of responses by the
estimated average amount of time it would take a registrant issuer to prepare and review a
Form 10-K summary. The portion of the burden carried by outside professionals is
reflected as a cost, while the portion of the burden carried by the issuer internally is
reflected in hours. For purposes of the PRA, we estimate that 75% of the burden of
preparation of Form 10-K is carried by the registrant internally and that 25% of the
burden of preparation is carried by outside professionals retained by the registrant at an
average cost of $400 per hour.3
Table 1.

Incremental Paperwork Burden under the interim final amendment.
Estimate
d number
of
affected
responses

Incremental
Burden
Hours/Form
(B)

Total
Incremental
Burden
Hours

75%
Company

25%
Professional

(D)=(C)*0.75

(E)=(C)*0.25

30,525

10,175

Professional
Costs
(F)=(E)*$400

(C)=(A)*(B)

(A)
Form 10-K
Summary

14.

814

50

40,700

$4,070,000

COSTS TO FEDERAL GOVERNMENT

The estimated cost of preparing the proposed amendments was approximately
$75,000.

2

For convenience, the estimated hour and cost burdens in the table have been rounded to the nearest whole
number.
3

We recognize that the costs of retaining outside professionals may vary depending on the nature of the
professional services, but for purposes of this PRA analysis we estimate that such costs will be an average
of $400 per hour. This estimate is based on consultations with several registrants, law firms and other
persons who regularly assist registrants in preparing and filing reports with the Commission.

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15.

REASON FOR CHANGE IN BURDEN

The interim amendment will increase the burdens and costs for registrants that
elect to prepare a summary in their Form 10-K. Table 2 below illustrates the changes in
cost and hour burdens from the burden estimates currently approved by OMB. Columns
(A) and (B) represent the most recent burden estimates submitted to OMB. Columns (C)
and (D) represent the new burden estimates under the interim amendment. Columns (E)
and (F) represent the program change, which encompasses the change in the burden
estimates attributable to the interim amendment.
Table 2:4

10-K

16.

Current Burden
Burden
Cost
Hours
(A)
(B)
12,198,095 $1,627,400,000

Change in Burden
Burden
Costs
Hours
(C)
(D)
12,228,620 $1,631,470,000

Program Change
Burden
Cost
Hours
(E)
(F)
30,525
$4,070,000

INFORMATION COLLECTION PLANNED FOR STATISTICAL
PURPOSES
Not applicable.

17.

APPROVAL TO OMIT OMB EXPLANATION DATE

We request authorization to omit the expiration date on the electronic version of
the form. Including the expiration date on the electronic version of the form will result in
increased costs, because the need to make changes to the form may not follow the
application’s scheduled version release dates. The OMB control number will be
displayed.
18.

EXCEPTIONS TO CERTIFICATION FOR PAPERWORK REDUCTION
ACT SUBMISSIONS
Not applicable.

B.

STATISTICAL METHODS
Not applicable.

4

Figures in Table 2 have been rounded to the nearest whole number.

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