Twitter Inc. TWTR, +2.41% received a letter from the Securities and Exchange Commission in June asking for more information on the company’s latest annual report and user-count methodologies, and Twitter responded to the inquiries later that month, according to letters released on the Edgar platform Wednesday. The SEC document from June 15 asked Twitter to discuss the methodology and assumptions behind counts of monetizable daily active users (mDAUs) and to explain how the company discovered errors in three years’ worth of old user counts, which Twitter disclosed in April. Twitter executives were also asked how they “concluded there was not a material weakness in your internal control over financial reporting and that your disclosure controls and procedures were effective” as of March 31. Twitter maintained in its June 22 response that its determination that fewer than 5% of mDAUs are false or spam accounts is accurate. The company also said that it “believes that it already adequately discloses the methodology that it uses in calculating these figures and the underlying assumptions and judgments of management” and outlined various factors. Twitter further said that its disclosure procedures were effective because the past overstatement of user numbers was “immaterial” to results. The SEC responded in late July to say that it completed a review of the filings by Twitter and issued a reminder that “the company and its management are responsible for the accuracy and adequacy of their disclosures.”
