Fewer public companies would be required to obtain an attestation of their internal control over financial reporting (ICFR) from an independent outside auditor under amendments the SEC voted recently to propose.
The amendments as proposed are designed to reduce costs for certain lower-revenue companies by changing the types of companies that are categorized as accelerated and large accelerated filers.
Under the proposal, smaller reporting companies with less than $100 million in revenues would not be required to obtain from an auditor an attestation of their internal control over financial reporting as described in the Sarbanes-Oxley Act of 2002 (SOX), P.L. 107-204.
The proposed amendments would not change other investor protections in SOX, such as independent audit committee requirements; CEO and CFO certifications of financial reports; or the requirement that companies continue to establish, maintain, and assess the effectiveness of their ICFR.
Proposed changes to acquisition and disposal disclosure: The SEC also proposed rules changes designed to provide investors improved information about acquired and disposed businesses while reducing the cost and complexity to businesses preparing disclosures.
Currently, Rule 3-05 of Regulation S-X requires SEC registrants that acquire a significant business other than a real estate operation to provide separate audited annual and unaudited interim pre-acquisition financial statements of that business. The number of years of financial information that must be provided depends on the significance of the acquisition to the registrant.
The SEC's proposed changes would address, among other items, significance tests; financial statements and permitted disclosures; and the use of, or reconciliation to, IFRS.
Comments on both proposals were to be accepted for 60 days after their publication in the Federal Register and can be submitted through the SEC website.