SEC exempts certain companies from ICFR attestation requirement

By Ken Tysiac

Smaller reporting companies with less than $100 million in revenue will no longer be required to obtain a separate attestation of their internal control over financial reporting (ICFR) from an outside auditor under amendments adopted Thursday by the SEC.

Under the amendments, these companies will continue to be required to establish and maintain effective ICFR. These companies’ principal executive and financial officers will be required to continue to certify that they are responsible for establishing and maintaining ICFR and have evaluated and reported on the effectiveness of the company’s disclosure controls and procedures.

These companies also will continue to be subject to a financial statement audit by an independent auditor, who will be required to consider ICFR in the performance of that audit. But the separate attestation of these companies’ ICFR by an outside auditor will no longer be required.

The amendments will:

  • Exclude from the accelerated and large accelerated filer definitions any issuer that is eligible to be a smaller reporting company and had annual revenues of less than $100 million in the most recent fiscal year for which audited financial statements are available. Business development companies will be excluded in analogous circumstances.
  • Increase the transition threshold for an accelerated and a large accelerated filer becoming a nonaccelerated filer from $50 million to $60 million. The transition threshold for exiting large accelerated filer status was raised from $500 million to $560 million.
  • Add a revenue test to the transition thresholds for exiting both accelerated and large accelerated filer status.
  • Add a check box to the cover pages of annual reports on Forms 10-K, 20-F, and 40-F to indicate whether an ICFR auditor attestation is included in the filing.

The amendments will take effect 30 days after publication in the Federal Register and apply to an annual report filing due on or after the effective date.

Ken Tysiac (Kenneth.Tysiac@aicpa-cima.com) is the JofA’s editorial director.

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