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If there’s one thing our broad experience has taught us, it’s this: One size does not fit all.
Accounting Today
Accounting Today
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The SEC’s proposed semiannual reporting framework could significantly alter the reporting calendar for eligible public companies, including financial institutions that currently file Form 10-Qs. On May 5, 2026, the SEC proposed rule and form amendments that would allow public companies to elect a new Form 10-S in place of quarterly Form 10-Q filings. Quarterly reporting would remain the default, and the proposed election would be optional.
If finalized, eligible registrants would have two reporting paths: continue filing three quarterly reports and one annual report each year or elect to file one semiannual report and one annual report.
The election would be made annually through Form 10-K, with no ability to switch reporting formats during the year. For banks and bank holding companies, that decision could influence the finance calendar, audit planning, disclosure controls, earnings communications, investor engagement, and governance activities for the year ahead.
While the proposal would reduce the number of interim SEC filings, many disclosure, governance, and certification requirements would remain unchanged.
Cost savings are only one side of the decision. Investors, analysts, rating agencies, lenders, and other stakeholders may still expect quarterly visibility into financial performance and banking metrics. If peer institutions continue filing Form 10-Q while one institution moves to a semiannual cadence, the choice itself could send a signal. For some stakeholders, it may suggest disciplined cost management. For others, it may raise questions about transparency, liquidity, or access to timely information.
Before making an election, institutions should engage with the audit committee, investors, legal counsel, auditors, and shareholders to understand stakeholder expectations. They should also monitor how peers respond. Expectations may differ significantly based on ownership structure, trading activity, analyst coverage, and capital market participation.
Financial institutions should recognize that a change in SEC filing frequency would not affect bank regulatory reporting requirements. Quarterly Call Reports, examiner access, and applicable bank-level control expectations would continue.
While Form 10-S could reduce certain SEC reporting obligations, financial institutions would still be subject to largely unchanged quarterly regulatory reporting requirements.
A longer interim reporting cycle may also affect governance and control processes throughout the organization.
Disclosure controls and ICFR frameworks should be evaluated to determine how a six-month reporting period affects internal timelines, close procedures, review controls, committee meetings, model governance, and documentation practices.
Many institutions may choose to continue providing quarterly updates through earnings releases furnished on Form 8-K. If so, leaders should apply appropriate governance and controls to those communications, including oversight of non-GAAP measures, performance metrics, and other investor-facing disclosures.
Insider trading policies deserve attention as well. Longer periods between SEC filings may increase the amount of material nonpublic information held within the organization. Directors and executives should understand those implications before adopting a different reporting cadence.
Elliott Davis can help banks and bank holding companies evaluate how proposed semiannual reporting requirements may affect reporting calendars, disclosure controls, audit planning, investor communications, debt covenants, and stakeholder expectations. Our Financial Services Group identifies practical considerations and supports leadership teams in making informed reporting decisions.
Contact the Elliott Davis Financial Services Group to discuss how this proposal could affect your institution’s reporting strategy and check out our recent webinar for more information.
Annual budget season often begins with a familiar routine: gather last year’s results, update assumptions, collect department input, and finalize next year’s plan.
For many middle-market companies, it is also an opportunity to evaluate whether the finance function is equipped to support growth.
As companies expand, enter new markets, or prepare for investment, leadership needs a planning system that explains performance, forecasts future outcomes, and supports better decision-making.
Most companies do not outgrow budgeting all at once. The warning signs usually appear gradually:
The issue is not that the budget is broken. More often, leadership is relying on a process designed for an earlier stage of growth.
Budgeting should become part of a broader planning framework that connects strategy, operations, and financial outcomes.
Modern Financial Planning & Analysis (FP&A) is an ongoing process that connects reporting, forecasting, scenario modeling, and strategic decision-making.
FP&A helps leadership:
Finance functions advance through five stages of maturity.
Most companies today sit at Level 2 or 3, where growth begins to outpace existing finance capabilities. At this point, historical reporting and static budgets are no longer enough.
One of the most important signs of financial maturity is moving from line-item budgeting to value driver-based planning.
Rather than assuming revenue will increase by a fixed percentage, leadership identifies the operational factors that influence results, such as:
The specific drivers vary by industry. Healthcare organizations may focus on patient volume and reimbursement rates, distributors on shipment volume and inventory turns, and manufacturers on throughput, labor efficiency, and capacity utilization.
By linking financial performance to operational drivers, organizations gain clearer forecasting, decision-making, and conversations with boards, lenders, and investors.
A budget reflects a point in time. FP&A builds on that foundation by creating a continuous planning process that links business strategy to financial outcomes.
Leaders define objectives, identify the drivers that influence performance, translate them into operating plans, forecast outcomes, and adjust as conditions change.
Instead of waiting until year-end to reset expectations, leadership can:
Rolling forecasts strengthen this process by helping leaders evaluate a range of possible outcomes early enough to act. Long-range planning extends the horizon, connecting strategic initiatives to a multi-year financial roadmap.
For private equity-backed companies, long-range planning also provides a framework for executing the value creation plan, translating growth, margin improvement, working capital, and operational initiatives into measurable outcomes and enterprise value.
Organizations may need to evaluate:
Without a long-term view, leadership may approve strategic initiatives without fully understanding the financial path required to execute them.
A mature planning process depends on reliable data, efficient systems, and clear processes. When finance teams spend budget season compiling spreadsheets, chasing inputs, reconciling data, and rebuilding reports manually, less time is available for analysis and decision support.
Effective FP&A supports every stage of the planning framework, from measuring performance drivers and managing budgets to forecasting outcomes and informing action. These environments often include:
These tools do not replace judgment. They provide leadership with faster access to better information.
The benefits include:
Most organizations can advance planning maturity incrementally, beginning with reliable reporting and a single source of truth before building forecasting, scenario analysis, and long-range planning capabilities.
Many companies recognize that their budgeting process is becoming more difficult, but struggle to identify where the gaps exist or what to improve first.
Elliott Davis helps organizations assess their planning maturity and build the FP&A capabilities needed to support growth. Our modular approach allows customers to strengthen individual planning components or implement a more comprehensive planning framework.
The result is less time spent managing data and spreadsheets and more time generating insights that improve performance and create enterprise value.
Ready to evaluate your planning maturity? Contact Elliott Davis to build FP&A capabilities that support the next stage of your business.
Carried interest is intended to align the economic interests of sponsors and investors, but the tax consequences do not always align with cash distributions. In certain private equity fund structures, general partners (GPs) may be allocated taxable income before receiving the corresponding carried interest distributions.
Key considerations include:
Many private equity sponsors are surprised to learn that taxable income and cash distributions do not always occur simultaneously.
While the GP’s economic entitlement is typically realized through carried interest, the tax rules governing partnership allocations can result in taxable income being allocated before the associated cash is distributed.
In a traditional private equity structure, limited partners (LPs) must first recover invested capital and, in many cases, achieve a preferred return before the GP becomes entitled to carried interest distributions. Collectively, these requirements are often referred to as the fund's hurdle.
Although the hurdle may delay cash distributions to the GP, taxable income allocations can occur earlier depending on the partnership agreement, allocation methodology, and the nature of the fund's underlying investments.
As a result, a GP may receive a Schedule K-1 reflecting taxable income while having received little or no corresponding cash.
Cash carry represents the actual cash distributions received by the GP as carried interest.
Once investors have satisfied the applicable hurdle requirements, the GP typically receives an agreed-upon percentage of future profits, commonly 20%.
Simply put, cash carry reflects the economic benefit received by the sponsor.
Tax carry refers to the taxable income allocated to the GP for tax reporting purposes.
Depending on the structure of the fund and the allocation provisions within the operating agreement, taxable income may be allocated before cash carry is distributed.
When this occurs, GP owners may be required to pay taxes on income that has not yet been monetized through distributions.
Many private equity funds address the cash vs. tax carry issue through tax distribution provisions.
Tax distributions are designed to provide liquidity to partners when taxable income allocations create a tax obligation before sufficient cash is otherwise distributed.
These provisions typically:
Thoughtful tax distribution provisions can improve liquidity management and reduce friction among stakeholders during periods of strong taxable performance but limited cash distributions.
Funds may face a heightened risk of a cash vs. tax carry mismatch when:
Assume a fund generates $100 million of taxable profits and the GP is entitled to a 20% carried interest.
Although the GP's economic share of profits is $20 million, the fund's waterfall may require investors to first satisfy capital recovery and preferred return thresholds before the GP receives a cash carry distribution.
Under certain allocation methodologies, the GP may nevertheless be allocated taxable income associated with its carried interest.
The result is a potential tax liability today on income that may not be distributed in cash until a later period.
Tax distributions can be one of the most effective tools for managing mismatches between taxable income and available cash. CFOs should assess whether existing fund agreements adequately address partner tax obligations and whether future fund structures should incorporate more robust provisions.
The timing of taxable allocations is often influenced by carry waterfalls, catch-up mechanisms, capital account maintenance provisions, and other partnership agreement terms. Periodic reviews can help identify areas where taxable income and cash economics may diverge.
Sponsors should understand potential tax obligations under various performance scenarios and ensure adequate liquidity is available if taxable income is allocated before cash distributions occur.
PortCo distribution policies can materially influence fund-level liquidity. Aligning cash distribution expectations with tax projections can help minimize unexpected liquidity pressures.
Tax planning opportunities at both the fund and PortCo level may help mitigate future taxable income exposure, improve cash flow alignment, and reduce the likelihood of significant tax liabilities arising before economic realizations.
Managing the cash vs. tax carry mismatch requires a coordinated understanding of fund economics, partnership taxation, and liquidity planning.
Elliott Davis works with private equity sponsors, management companies, and fund finance teams to:
For many funds, the real challenge is not the amount of carry generated, but the timing of when taxable income is allocated and cash is received by the GP. Understanding that difference can help CFOs make more informed decisions today while positioning future funds for greater efficiency.
Contact us to discuss your fund’s tax and liquidity planning considerations.
