On March 12, 2020, the SEC adopted amendments to the definitions of “accelerated filer” and “large accelerated filer.” The amendments exclude from these definitions smaller reporting companies with annual revenues of less than $100 million, and increase the transition thresholds for becoming a non-accelerated filer and exiting large accelerated filer status.
However, the most significant effect of the change is arguably that smaller issuers will no longer be required to obtain independent auditor attestation of internal control over financial reporting, or ICFR. Auditor attestation of ICFR is a costly and cumbersome process, and smaller issuers have long sought this type of exemption. The investor community has objected to any relaxation of auditor attestation, ostensibly because it believes smaller issuers are precisely the companies that need such attestation.
CEOs and CFOs will still be required to certify that they are responsible for establishing and maintaining ICFR and have evaluated and reported on the effectiveness of disclosure controls and procedures. And independent auditors will still be required to consider ICFR in the performance of financial statement audits.
The amendments will take effect 30 days following publication in the Federal Register.
Further details on the amendments will be available shortly in The Securities Edge, our securities and corporate governance blog. If you have any questions in the meantime, please contact Gunster securities law and corporate governance practice leader Bob Lamm.
