Your Q2 2026 Form 10-Q is due August 11. Once it is filed, the SEC's Division of Corporation Finance may select it for review. Most companies receive a comment letter within 30 days of filing if selected, though the timeline varies. The question every IR team and CFO is asking right now: what will the comment letter say?
The answer has shifted meaningfully in 2026. Total comment letter volume is down compared to prior years, which sounds reassuring but is not. The SEC staff is being more selective and more targeted, meaning the letters that are issued are more pointed, more specific to the company's disclosures, and more likely to require substantive revisions rather than confirmatory responses. PwC's SEC comment letter trends analysis through March 31, 2026 confirms this pattern, as does the Harvard Law Forum on Corporate Governance reporting season guide published January 14, 2026: MD&A and non-GAAP comments each increased more than 10% even as total volume declined.
Simultaneously, three topics that barely registered in the 2024 comment letter record are now generating material comment volume in 2026: tariff quantification, AI disclosure, and geopolitical known trends disclosures.
This post covers what companies are consistently getting wrong in the perennial focus areas and what is specifically new in 2026.
How Many Comment Letters Did the SEC Issue in 2025-2026, and Is Volume Up or Down?
Total SEC comment letter volume has been on a declining trend since the 2019 to 2021 period. PwC's analysis through March 31, 2026 confirms that total comment letter volume in the 12-month period ended March 31, 2026 was lower than the prior comparable period, continuing the multi-year trend toward fewer but more focused letters.
The Deloitte Roadmap to SEC Comment Letter Considerations, updated in late 2025 and reflecting the most current available data, confirms the pattern: the SEC staff has increasingly focused reviews on companies with material disclosures in high-priority areas rather than applying broad-based review programmes.
The decline in volume does not mean reduced risk for individual filers. The SEC's selection criteria for review have shifted toward companies with material disclosures in specific areas that the staff has identified as priority concerns. A company that files a Q2 10-Q with tariff exposure, AI disclosure, or Iran war-related geopolitical language is more likely to be selected for review in 2026 than a company with none of those disclosures, regardless of total filing size.
The SEC's Division of Corporation Finance typically reviews each registrant's periodic filings at least once every three years. Companies that have not received a comment letter in recent years should not interpret this as a signal of clean disclosure. The three-year review cycle means that even companies with historically comment-free filings may be selected for their next review cycle around the time of their 2026 annual or quarterly filing.
The median comment letter resolution time has remained at approximately 75 to 90 days from initial comment to resolution, based on EDGAR comment letter data, with more complex letters taking longer.
The Two Perennial Leaders: Why MD&A and Non-GAAP Still Generate More Comments Than Everything Else Combined
Year after year, the two most commented areas in SEC review are MD&A and non-GAAP financial measures. The Harvard Law Forum January 2026 reporting season guide confirmed that both categories increased more than 10% in comment volume even as total volume declined, indicating that the SEC staff is specifically prioritising these two areas in its reviews.
MD&A generates the most total comment volume of any filing section. The comments span a wide range of specific issues, but the common thread is the same: disclosure that is not specific to the registrant's actual experience.
Non-GAAP generates the second-highest comment volume and is the area where the SEC has been most consistent and most specific in its guidance. The Regulation G and Item 10(e) framework gives the SEC clear authority to require companies to conform their non-GAAP presentations, and the staff uses that authority actively.
Both areas are covered in more detail in the sections below. The reason to note their perennial leadership position is that any company preparing a Q2 2026 10-Q should treat the MD&A results of operations discussion and the non-GAAP reconciliation as the two sections most likely to generate a comment letter, regardless of what other factors are in play.
What "Still Getting Wrong" in MD&A: Generic Language, Missing Quantification, and Period-to-Period Failures
The three specific MD&A deficiencies that appear most frequently in SEC comment letters are each described in the SEC's own guidance and each represent the same underlying failure: disclosure that could have been written before the period ended.
Generic language. The MD&A results of operations discussion must explain why results changed, not merely that they changed. A disclosure that says "revenue increased due to volume growth and favourable pricing" is generic if it does not identify the specific products or segments where volume grew, the approximate magnitude of each driver, and the reason volume grew in those areas. The SEC staff expects the MD&A to read like a narrative explanation of the financial statements from the perspective of management, which requires specificity about causes and magnitudes.
Missing quantification. The National Law Review's January 2026 summary of SEC comment trends confirmed that the staff is specifically requesting quantification of material factors contributing to period-over-period changes. Where multiple factors contributed to a change in a line item, the staff expects each material factor to be quantified separately or the proportionate contribution of each factor to be described. The Jin Medical comment letter from March 2025 is a specific example where the staff asked the company to quantify the contribution of each factor it identified as a driver of revenue changes, rather than listing factors without attribution.
Period-to-period comparisons. The Birkenstock comment letter from March 2025 flagged a failure to provide adequate period-to-period comparison for a metric identified in the MD&A as a key performance indicator. Where the MD&A introduces a KPI or other metric, the disclosure must compare the metric across periods consistently and explain changes in the metric between periods.
The specific drafting question that would prevent all three types of comment: can a securities analyst, reading only the MD&A results of operations discussion, reconstruct what drove the change in each material line item, in approximately what dollar amounts, and for what specific business reasons? If the answer is no, the disclosure likely falls short of Item 303 requirements.
What "Still Getting Wrong" in Non-GAAP: The Four Specific Issues the Staff Flags Most (In Order of Frequency)
The White and Case January 2026 annual reporting guide provides the clearest breakdown of the specific non-GAAP issues the SEC comments on most frequently. The four issues, in order of frequency:
First: prominence. Item 10(e)(1)(i)(A) requires that non-GAAP measures not be presented with greater prominence than the most directly comparable GAAP measure. The most common prominence violation is presenting Adjusted EBITDA as a header metric in the earnings release or earnings call presentation without equally prominent presentation of GAAP net income. Press releases with Adjusted EBITDA as the first and largest number, with the GAAP reconciliation buried later, receive comments requesting restructured presentation.
Second: characterisation of excluded items as non-recurring when they recur. The staff has specifically flagged companies that exclude stock-based compensation, restructuring charges, or other items as non-recurring when those items have appeared in multiple periods. Where a non-GAAP adjustment excludes an item that has recurred in each of the prior three years, the staff questions whether describing it as unusual or non-recurring is appropriate. The SEC Compliance and Disclosure Interpretation 100.01 is explicit on this point.
Third: individually tailored accounting principles. Non-GAAP measures that exclude categories of expense that appear in GAAP net income but that are described in ways that suggest they reflect a different accounting standard rather than a management adjustment. The staff comments on non-GAAP presentations that effectively represent a different income statement presentation without adequate explanation of why the adjustment provides useful information.
Fourth: incomplete or unclear reconciliation. The reconciliation from the non-GAAP measure to the most directly comparable GAAP measure must be line-by-line, with each adjustment identified and explained. Reconciliations that aggregate multiple adjustments into single line items, or that do not clearly identify which GAAP line item each adjustment relates to, receive comments requesting more granular reconciliation.
For Q2 2026, a specific non-GAAP concern flagged by OCA's Heather Rosenberger at SEC Speaks 2026 (confirmed in the Perkins Coie SEC Speaks summary): non-GAAP adjustments that exclude tariff costs as non-recurring items. OCA's position is that tariff costs are a recurring operating expense for importers, not a one-time unusual item, and adjusting for them produces a measure that is not representative of the company's actual operating performance.
New in 2026 Focus Area #1: Tariff Disclosure, Why "May Affect Our Cost Structure" Is No Longer Enough
The SEC staff's attention to tariff disclosures accelerated in 2025 and continued into 2026. The Deloitte and White and Case January 2026 reporting guides both confirmed that tariff disclosures are an emerging focus area, with generic language being the specific issue flagged.
The tariff comment letter pattern documented in the 2025 record (summarised in the Gibson Dunn February 2026 10-K considerations guide): companies identified tariffs as a contributing factor to cost increases without quantifying the tariff-specific contribution separately from other cost drivers. The staff comment asks the company to revise to quantify the contribution of tariff costs to the period-over-period change in cost of goods sold or other affected line items.
The Nasdaq Lens analysis published in 2026 confirmed that mentions of tariffs in SEC filings increased 163% between 2024 and 2025, reflecting how rapidly tariff exposure entered the disclosure environment. The SEC staff's comment letter activity lagged the initial filing uptick, meaning the full comment volume attributable to 2025 tariff disclosures was not visible until 2026 reviews.
The four comment types most common in the tariff context:
Attribution without quantification: the company named tariffs as a factor but did not quantify the tariff contribution.
Generic risk factor language describing tariff risk as a future uncertainty when material tariff costs had already been incurred in the current period.
Mitigation claims without specifics: the company referenced mitigation strategies without disclosing whether those strategies fully or partially offset the tariff impact.
Inconsistency between risk factors and MD&A: the risk factor described tariffs as a future risk while the MD&A simultaneously described material tariff costs already incurred.
For the Q2 2026 10-Q, the tariff disclosure guide from earlier in this cluster covers the specific MD&A requirements in detail. The key point for comment letter purposes: if tariff costs were material to Q2 results, they must be separately quantified in the results of operations discussion with the same specificity required for any other material cost driver.
New in 2026 Focus Area #2: AI Disclosure, The "AI Washing" Problem and What Actual Comment Letters Are Flagging
The Nasdaq Lens analysis confirmed AI rose to the seventh most commented area in the 12-month period ended in 2025, up from essentially zero three years earlier. Two dimensions of AI disclosure are now generating separate categories of comment.
The first dimension is AI risk factor specificity. The SEC staff reviewed a sample of AI-related disclosures by S&P 500 companies and found most were not tailored to the individual company or its business. Division Deputy Director Cicely LaMothe stated this finding publicly at the 2024 AICPA Conference. Companies that have copied industry-standard AI risk language without tailoring it to their specific AI systems, specific competitive environment, or specific regulatory exposure receive comments requesting revision to ensure the risk factor is specific to this company and not applicable to any issuer in any industry.
The second dimension is accuracy and AI washing enforcement. SEC Chairman Atkins confirmed at the March 2026 FSOC roundtable that the SEC is watching AI claims in public filings and marketing materials for accuracy. The Presto Automation enforcement action (confirmed in the Finrep blog on AI disclosure from July 2026) was brought against a company for making false and misleading statements about its use of AI technology. Presto Automation claimed broader AI deployment than its technology actually enabled, and the SEC brought it as a securities fraud case.
The AI washing risk exists for two types of companies in Q2 2026 disclosures:
Companies that claim AI capabilities in their earnings calls or investor presentations that are not substantiated in the 10-Q. Inconsistency between public statements about AI and SEC filings is the specific trigger the staff looks for.
Companies that disclose material AI risks without describing their actual AI governance, oversight, and risk management processes. Where AI is identified as material, the staff has encouraged disclosure of board-level governance of AI risk.
The comment record on AI is confirmed from the Orrick analysis of 92 comment letters to 56 companies between 2021 and October 2024, published by the Harvard Law School Forum on Corporate Governance in January 2025. The most common AI comment is a request to revise to ensure that risk factor language is tailored to the company and not applicable to any issuer in any industry.
New in 2026 Focus Area #3: Geopolitical and Iran War "Known Trends", What Item 303 Requires When the Impact Is Quantifiable
The Harvard Law Forum January 2026 reporting season guide confirmed that the SEC staff is requesting quantification of macro impacts in the known trends and uncertainties section of the MD&A, including geopolitical conflicts. The Iran war, oil price cycle, and ceasefire collapse are exactly the type of known trends or uncertainties that Item 303(b)(2)(ii) of Regulation S-K requires to be disclosed where management reasonably expects a material impact on future revenues or income.
The comment pattern for geopolitical disclosures is the same as for tariff disclosures: attribution without quantification. A disclosure that says "current geopolitical tensions in the Middle East, including the recent Iran war and its impact on global oil prices, may materially affect our business" names the event without describing how specifically it affects this company, in what magnitude, and through what mechanism.
The Item 303 known trends standard requires disclosure when management is aware of the trend or uncertainty and reasonably expects it will have a material effect. For companies with material fuel cost, logistics cost, commodity input, or customer demand sensitivity to oil prices, the chain from Iran war to Strait of Hormuz disruption to oil price spike to company-specific cost increase or revenue impact is a known trend that must be quantified where material.
The Jin Medical comment letter from March 2025 (flagged in the primary sources) is the documented example of the staff asking a company to quantify the contribution of each macro factor it identified in the known trends discussion. The comment asked the company to provide additional quantitative information about the magnitude of each factor's expected impact on future results.
For Q2 2026 10-Qs, the Iran war oil price cycle, the July 8 ceasefire collapse, the resulting oil price spike, and the Fed rate hike probability shift are all known trends that management is aware of and that may have material impact on future results. The specific disclosure obligation depends on whether the impact is material to this company's specific operations. Where material, the quantification should be attempted even if the estimate is a range rather than a precise figure.
The Rising Areas: Segment Reporting, EPS, and Debt Disclosures Now in the Top 10
The Deloitte Roadmap update confirmed three areas that were not previously in the top 10 comment areas have moved into the top 10 in the most recent 12-month period: segment reporting, earnings per share, and debt disclosures.
Segment reporting comments under ASC 280 typically focus on the aggregation of operating segments, the identification of the chief operating decision maker, and the completeness of segment-level disclosures. The staff has questioned companies that aggregate multiple business lines into a single reportable segment where those business lines have materially different economic characteristics. Companies that reorganised their segment structure in connection with OBBBA tax changes or Iran war-related business restructuring may face questions about whether the revised segment structure reflects a genuine change in how management operates the business.
EPS comments typically focus on the computation of diluted EPS when there are complex capital structures, performance-based equity awards, convertible instruments, or participating securities. The staff has questioned companies whose diluted EPS computation excludes antidilutive instruments in ways that are not consistent with the requirements of ASC 260.
Debt disclosure comments focus on the completeness and clarity of disclosures about debt covenants, maturity schedules, and the impact of covenant violations or waiver requirements. Companies with significant debt maturities in the near term, or companies that are near covenant compliance thresholds due to OBBBA or Iran war-related operating conditions, face heightened scrutiny on their debt disclosures.
What Dropped Out: Revenue Recognition, Income Taxes, and Fair Value Now Below the Top 10
The Deloitte Roadmap update is the most specific source on which areas have declined in comment frequency. Income taxes dropped to approximately 15th from a prior position in the top 10. Revenue recognition has also declined. Fair value measurement has declined.
The decline in income taxes comments is notable given the OBBBA-driven complexity of the Q2 2026 provision. The likely explanation is that the staff is allowing a first-year transition period for OBBBA-related ASC 740 issues before actively commenting on them. Companies should not interpret the decline in income tax comment frequency as license to shortcut the OBBBA provision documentation. As noted in the valuation allowance blog from this cluster, PCAOB inspections are separately flagging ASC 740 as a high-judgment audit deficiency area.
Revenue recognition's decline likely reflects the maturation of ASC 606 implementation: most companies completed their adoption work between 2018 and 2020, and the standard is now embedded in routine disclosure practice. However, companies with unusual revenue arrangements (software-as-a-service, licencing, variable consideration, or performance obligations that have changed in structure) still generate revenue recognition comments.
The XBRL Problem That Won't Go Away: Why Tagging Deficiencies Are Still Generating Comments in 2026
The Cleary Gottlieb December 2025 annual report guide specifically flagged that the SEC continues enforcing XBRL tagging standards through the comment letter process and that iXBRL tagging deficiencies remain a source of comment letters in 2026 despite years of mandatory iXBRL compliance.
Three categories of XBRL tagging deficiencies that continue to generate comments:
Using incorrect or non-standard taxonomy elements. Companies that create custom elements for amounts that should be tagged with standard US GAAP taxonomy elements, or that apply incorrect data types (positive vs negative, per-share vs aggregate), receive deficiency notices and comment letters.
Block text tagging applied too broadly. The SEC expects granular tagging of specific disclosures within notes to financial statements. Companies that wrap entire note disclosures in a single block text element rather than applying the appropriate element-level tags for each required disclosure receive comments requesting more granular tagging.
Cybersecurity CYD taxonomy deficiencies. As covered in the cybersecurity iXBRL blog from this cluster, the CYD 2024 taxonomy must be used for cybersecurity disclosures filed since December 18, 2024. Companies using the incorrect taxonomy version or omitting the required boolean materiality indicator continue to receive deficiency notices.
The XBRL comment process differs from substantive disclosure comments: XBRL deficiency notices are often resolved quickly through amended filings rather than through correspondence, but they still consume compliance team time and create a filing record of errors that the SEC can track.
How to Self-Review Your Filing Before the SEC Does: A Pre-Submission Comment Letter Checklist
The most effective way to avoid SEC comment letters is to perform a structured self-review that applies the SEC staff's documented focus areas before the filing is submitted. The following checklist addresses the specific areas most likely to generate comments in Q2 2026 filings.
MD&A results of operations: can each material period-over-period change in each significant line item be traced to specific, quantified drivers? For each driver identified, is the dollar or basis point contribution of that driver separately stated? Tariff costs, Iran war logistics costs, oil price impacts, and Fed rate changes should each have a separate quantified attribution where material.
Non-GAAP reconciliation: is each adjustment identified by name, described as to its nature, and reconciled to the specific GAAP line item it adjusts? Does any adjustment involve a cost category that has recurred in the prior three years? Are tariff costs excluded as non-recurring in any non-GAAP presentation? Has the prominence requirement been checked against the most recent Regulation G and C&DI guidance?
AI risk factors: are the company's AI risk factors specific to its actual AI systems, specific business functions, and specific competitive environment? Could the risk factor language apply to any company in the industry without modification? Is there any AI-related claim in a recent earnings call or investor presentation that is not reflected in or supported by the 10-Q disclosure?
Geopolitical known trends: has management assessed whether the Iran war, oil price cycle, or Fed rate hike probability shift represents a known trend that management reasonably expects will have a material impact on future results? If yes, has the MD&A quantified the expected impact?
Tariff disclosures: are tariff costs separately quantified in the results of operations discussion where material? Is the risk factor description of tariff exposure consistent with the actual tariff costs already incurred described in MD&A?
XBRL: has the filing been validated with the EDGAR filing system validation tool? Has the CYD 2024 taxonomy been used for any cybersecurity disclosures? Have custom elements been reviewed to confirm they are necessary and correctly defined?
Subsequent events: have the July 8 ceasefire collapse, oil price spike, and Treasury yield movement been assessed under ASC 855 for disclosure requirements?
Frequently Asked Questions
How many SEC comment letters were issued in 2025?
Total SEC comment letter volume declined in 2025 compared to prior years, continuing a multi-year trend toward fewer but more targeted letters. The specific number is not published by the SEC staff, but PwC's analysis through March 31, 2026 and the Deloitte Roadmap both confirm the declining volume trend. The decline in volume does not reduce risk for individual filers because the staff has become more selective in which filings it reviews and more pointed in the comments it issues.
What are the most common SEC comment letter topics in 2026?
MD&A and non-GAAP financial measures lead by a significant margin, each increasing more than 10% in comment frequency even as total volume declined. Other topics in the top 10 include segment reporting, EPS, debt disclosures, AI disclosures (now approximately seventh per Nasdaq Lens), and XBRL tagging deficiencies. New in 2026 are tariff disclosure quantification and geopolitical known trends disclosures.
What does the SEC consider "generic" MD&A disclosure?
Generic MD&A disclosure is language that could apply to any company in any industry without modification. Specific examples: describing revenue increases as due to "volume and pricing" without specifying which products, segments, or customer categories drove the change, or identifying tariffs as a contributing cost factor without quantifying the tariff contribution separately from other cost drivers.
What non-GAAP issues does the SEC comment on most frequently?
In order of frequency per the White and Case January 2026 guide: prominence violations (non-GAAP measure presented more prominently than the comparable GAAP measure), excluded items characterised as non-recurring when they recur each year, individually tailored accounting principles that create confusion about the nature of the adjustment, and incomplete or unclear reconciliations.
Does the SEC issue comment letters about tariff disclosures?
Yes. The Deloitte and White and Case 2026 reporting guides confirm tariff disclosures are an emerging comment focus area. The most common tariff comment is a request to quantify the contribution of tariff costs to the period-over-period change in cost of goods sold or gross margin, separate from other cost drivers. OCA also stated at SEC Speaks 2026 that non-GAAP exclusion of tariff costs as non-recurring is not appropriate for most companies.
What is "AI washing" and has the SEC taken enforcement action?
AI washing refers to making false or exaggerated claims about a company's use of AI technology in its products, services, or operations. The Presto Automation enforcement action was brought by the SEC against a company for making false and misleading statements about its AI deployment. SEC Chairman Atkins confirmed at the March 2026 FSOC roundtable that the SEC is monitoring AI claims in public filings for accuracy and consistency with actual capabilities.
How long does it typically take to receive an SEC comment letter after filing?
The SEC's processing objective is to complete initial review within 30 days of filing. In practice, comment letters are typically received within 30 to 60 days of the filing date for selected filings. Companies do not receive advance notice that they have been selected for review.
Can SEC comment letters become public?
Yes. SEC comment letters and company responses are published on EDGAR after a 20-business-day review period following the completion of the comment review process. All historical comment letters and responses for public companies are searchable on EDGAR using filing type UPLOAD (for SEC comments) and CORRESP (for company responses).
What happens if you do not respond to an SEC comment letter?
Non-response is not a viable option. The SEC staff will follow up if a response is not received within the requested timeframe, and persistent non-response can result in stop orders on registration statements or referral to the Division of Enforcement. For periodic reports, non-response to a comment letter does not prevent the company from continuing to file, but it creates an open comment record that must be resolved before the company can have a registration statement declared effective.
Key Takeaways
- Total SEC comment letter volume declined in 2025, but MD&A and non-GAAP comments each increased more than 10%, reflecting the staff's focus on the two highest-priority disclosure areas.
- MD&A comments most commonly target: generic language without company-specific attribution, missing quantification of material cost or revenue drivers, and failure to compare key metrics period-to-period. The staff expects each material line item change to be attributable to specific, quantified drivers.
- Non-GAAP comments most commonly target: prominence violations, recurring items excluded as non-recurring, individually tailored accounting principles, and incomplete reconciliations. OCA confirmed at SEC Speaks 2026 that tariff costs should not be excluded as non-recurring items in non-GAAP presentations.
- Three new 2026 focus areas: tariff quantification (confirmed by Deloitte and White and Case), AI washing and specificity (Nasdaq Lens confirms AI is now approximately 7th most commented area), and geopolitical known trends including Iran war impact quantification (Harvard Law Forum confirms staff is requesting quantification of macro impacts).
- Rising to the top 10: segment reporting, EPS, and debt disclosures. Declining from top 10: revenue recognition, income taxes (now approximately 15th per Deloitte), and fair value measurement.
- XBRL tagging deficiencies continue to generate comments, particularly for companies using incorrect taxonomy elements, applying block text tags too broadly, or using the CYD 2023 taxonomy instead of CYD 2024 for cybersecurity disclosures.
- Pre-submission self-review should specifically address: MD&A quantification of tariff/Iran war/oil/rate impacts, non-GAAP prominence and reconciliation completeness, AI risk factor specificity and consistency with earnings call statements, geopolitical known trends assessment, and XBRL validation.
