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Public Company Financial Executive Briefing
SHORT-TERM BORROWINGS DISCLOSURE
By Connie Kwong, CPA, Senior Manager - Assurance & Advisory Practice
The Security and Exchange Commission issued a proposed
rule, Short-Term Borrowings Disclosure, on September 17,
2010 to enhance disclosure that registrants provide to
investors regarding the use and impact of their short-term
financing arrangements.
Who Would Be Affected by the Proposed Rule?
The amendments in this proposed rule would affect all
entities.
The SEC believes that leverage and liquidity continue to
be significant areas of focus for investors, and MD&A
disclosure relating to liquidity and capital resources is
critical to an assessment of a company’s prospects for the
future and even the likelihood of its survival.
The proposal would require a registrant to provide, in
a separately captioned subsection of Management’s
Discussion and Analysis of Financial Condition and
Results of Operations, a comprehensive explanation of
its short-term borrowings, including both quantitative and
qualitative information. The proposed amendments would
be applicable to annual and quarterly reports, proxy, or
information statements that include financial statements,
registration statements under the Securities Exchange Act
of 1934, and registration statements under the Securities
Act of 1933.
Under the proposed rule, “short-term borrowings” would
be defined by reference to the various categories of
arrangements that comprise the short-term obligations
reflected in a registrant’s financial statements, and all
registrants would be required to present information for
each category of short term borrowings. Specifically, as
proposed, “short-term borrowings” would mean amounts
payable for short-term obligations that are:
• federal funds purchased and securities sold under
agreements to repurchase,
• commercial paper,
• borrowings from banks,
• borrowings from factors or other financial institutions,
and
TUESDAY, NOVEMBER 2, 2010
• any other short-term borrowings reflected on the
registrant’s balance sheet.
Exiting Requirements for Disclosure of Short-
Term Borrowings
Exiting MD&A requirements call for discussion and analysis
of a registrant’s liquidity and capital resources. However,
other than liquidity and capital resources, companies that
do not provide Industry Guide 3 disclosure, Statistical
Disclosure by Bank Holding Companies (“Guide 3”), are
not subject to any line item requirements for the reporting
of specific data regarding short-term borrowing amounts or
information about intra-period borrowing levels.
Proposed New Short-Term Borrowings Disclosure
in MD&A
The proposed amendments would codify in Regulation
S-K, the Guide 3 provisions for disclosure of short-term
borrowings applicable to bank holding companies and
would apply to all companies that provide MD&A disclosure,
not only to bank holding companies and other financial
institutions. The SEC proposed to include a narrative
explanation together with tabular data for the short-term
borrowings.
As proposed, registrants would be required to provide
disclosure in MD&A of:
• the amount in each specified category of short-term
borrowings at the end of the reporting period and the
weighted average interest rate on those borrowings,
• the average amount in each specified category of
short-term borrowings for the reporting period and the
weighted average interest rate on those borrowings,
• for registrants meeting the proposed definition of
“financial company,” the maximum daily amount of each
specified category of short-term borrowings during the
reporting period, and
• for all other registrants, the maximum month-
end amount of each specified category short-term
borrowings during the reporting period.

The SEC also proposed to require a narrative discussion of
short-term borrowing arrangements which is not currently in
Guide 3. The topics proposed to be included would be:
• a general description of the short-term borrowings
arrangement included in each category and the
business purpose of those arrangements,
• the importance to the registrant of its short-term
borrowings arrangements to its liquidity, capital
resources, market-risk support, credit-risk support, or
other benefits,
• the reason for the maximum amount for the reporting
period, including any non-recurring transactions or
events, use of proceeds, or other information that
provides context for the maximum amount, and
• the reasons for any material differences between
average short-term borrowings for the reporting period
and the period-end short term borrowings.
Besides enhancing the disclosure requirements and
requiring interim period disclosure to be at the same level of
detail as is for the annual presentation, the proposed rule
also adds short-term borrowings disclosure requirements to
Item 5 of Form 20-F and conforming the definition of “direct
financial obligations” in Form 8-K.
Comments Due
The proposed rule is opened for comments until November
29, 2010.

FOR FURTHER INFORMATION, PLEASE CONTACT ONE OF THE FOLLOWING:

Connie Kwong:   Jim Pitrat:  Harmeet Singh:  Gale Moore:  

CKwong@singerlewak.com  JPitrat@singerlewak.com  HSingh@singerlewak.com  GMoore@singerlewak.com 
310.477.3924 310.477.3924 408.294.3924 949.261.8600 
Senior Manager Practice Leader Business Combinations Subject Matter Expert  Business Combinations Subject Matter Expert 
Assurance & Advisory Assurance & Advisory Los Angeles, Silicon Valley  Orange County, San Diego