Compliance of a subsidiary 463



  • Is there a Sarb-Ox compliance requirement for a privately owned LLC whose largest equity owner is a publicly traded corp?



  • Is there a Sarb-Ox compliance requirement for a privately owned LLC whose largest equity owner is a publicly traded corp?
    here’s Appendix B of Standard 2:
    B15. For equity method investments, the evaluation of the company’s internal control over financial reporting should include controls over the reporting in accordance with generally accepted accounting principles, in the company’s financial statements, of the company’s portion of the investees’ income or loss, the investment balance, adjustments to the income or loss and investment balance, and related disclosures. The evaluation ordinarily would not extend to controls at the equity method investee.
    however, i do remember reading guidance from the SEC (maybe just a FAQ) that states if the parent has alot of control and CAN test controls at the equity investee, the parent should consider doing so.
    The rule of thumb though is that if they’re not consolidated, then you don’t have to worry about 404. The parent just needs to document the controls over financial reporting in accordance with Gaap.



  • Short answer is no, with a but…
    A privately-owned LLC does not need to comply, althogh your publicly traded investor will. Any requirement on you would derive from your parent/investor’s need to comply THEMSELVES. You would not have to complete any filing to the SEC nor included any assertion in YOUR financial statements.
    As unlv said, if you are not consolidated you probably don’t have to worry.


Log in to reply