Accelerated Filer Deferral 1775
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Is anyone aware of rule that allows accelerated filers, when the company reduces it’s value below USD50M by the June 30 measurement date, to take advantage of the non-accelerated filer rules, including longer reporting periods and deferral of current year 404 compliance until 2007?
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I am aware of an accelerated filer deferral on external audit review of SOX for small FPIs. This would still require full compliance and internal audit review for 2006 however.%0A I think there may also be an exemption for non-accelerated filers unti 2007 : see below:%0A SEC Provides Further Relief from Section 404 Compliance %0A %0AAugust 9, 2006 - Today, the Securities and Exchange Commission (‘Commission’) issued two releases to grant smaller public companies and many foreign private issuers further relief from compliance with Section 404 of the Sarbanes-Oxley Act of 2002. The relief is in furtherance of the ‘next steps for Sarbanes-Oxley implementation’ (SEC Press Release 2006-75) announced by the SEC on May 17, 2006, and includes some new initiatives not previously announced. Today’s releases also follow the July 11, 2006, publication of a Concept Release soliciting public comment on guidance for management the SEC plans to issue to assist companies in assessing their internal controls over financial reporting. %0AAttached are the two SEC releases and the SEC press release. An excerpt from the SEC press release follows.%0A--------------------------------------------------------------------------------%0AA summary of the subjects of the two releases appears below: %0ARelief from Section 404 Compliance Dates for Smaller Companies (Non-Accelerated Filers). The Commission is proposing to grant relief to smaller public companies by extending the date by which non-accelerated filers must start providing a report by management assessing the effectiveness of the company’s internal control over financial reporting. The initial compliance date for these companies would be moved from fiscal years ending on or after July 15, 2007, until fiscal years ending on or after Dec. 15, 2007. The Commission also proposes to extend the date by which non-accelerated filers must begin to comply with the Section 404(b) requirement to provide an auditor’s attestation report on internal control over financial reporting in their annual reports. This deadline would be moved to the first annual report for a fiscal year ending on or after Dec. 15, 2008. This proposed extension would result in all non-accelerated filers being required to complete only the management’s portion of the internal control requirements in their first year of compliance with the requirements. This proposal is intended to provide cost savings and efficiency opportunities to smaller public companies and to assist them as they prepare to comply fully with Section 404’s reporting requirements. This proposed extension will provide these issuers and their auditors an additional year to consider, and adapt to, the changes in Auditing Standard No. 2 that the Commission and the Public Company Accounting Oversight Board intend to make, as well as the guidance for management the SEC intends to issue, to improve the efficiency of the Section 404(b) auditor attestation report process. %0AApproximately 44% of the domestic companies and 38% of the foreign private issuers that file periodic reports with the Commission are non-accelerated filers. %0AThe Commission seeks public comment on all aspects of this proposal. Comments should be submitted within 30 days of the proposal’s publication in the Federal Register. %0ARelief from Section 404(b) Compliance Date for Certain Foreign Private Issuers. The Commission is granting relief from Section 404(b) compliance for foreign private issuers that are accelerated filers (but not large accelerated filers), and that file their annual reports on Form 20-F or 40-F. These companies will have their compliance deadline extended for an additional year, so that they will not begin complying with the Section 404(b) requirement to provide an auditor’s attestation report on internal control over financial reporting in their annual reports until fiscal years ending on or after July 15, 2007. This group of issuers will be required to comply only with the Section 404 requirement to include management’s report in the Form 20-F or 40-F annual report filed for their first fiscal year ending on or after July 15, 2006. They will not need to comply with the requirement to provide the registered public accounting firm’s attestation report until they file a Form 20-F or 40-F annual report for a fiscal year ending on or after July 15, 2007. %0AThe Commission’s data indicate that about 23% of the approximately 1,200 foreign private issuers that are subject to the Exchange Act reporting requirements are accelerated filers that will receive the one-year extension of the compliance dates for the Section 404(b) auditor attestation requirement. Because approximately 38% of foreign private issuers are non-accelerated filers that will benefit from the steps outlined in Item 1 above, over 60% of the community of foreign private issuers will receive a measure of relief as a result of the actions we’re announcing today. The Commission’s actions today do not change the date by which a foreign private issuer that is a large accelerated filer must comply with both the Section 404(a) and (b) requirements. These filers are required to include both a report by management and an attestation report by the issuer’s registered accounting firm on internal control over financial reporting in their Form 20-F or 40-F filed for a fiscal year ending on or after July 15, 2006.%0AThis extension is a final Commission action and will be effective shortly, on the date that the Commission release granting the extension is published in the Federal Register. %0AProposed Transition Relief for Newly Public Companies. In the same release in which it proposes an extension of the Section 404 compliance dates for non-accelerated filers, the Commission also proposes a transition period for newly public companies. This transition relief would apply to any company that has become public through an IPO or a registered exchange offer, or that otherwise becomes subject to the Exchange Act reporting requirements. It would include a foreign private issuer that is listing on a U.S. exchange for the first time. To provide meaningful relief to companies that are new to the U.S. markets and our reporting requirements, the Commission is proposing to amend its rules so that a company would not be required to provide either a management assessment or an auditor attestation report until it has previously filed one annual report with the Commission. This relief is being proposed in recognition of the fact that preparation of a newly public company’s first annual report can be a time and resource intensive process that may quickly follow an IPO or initial listing. By not requiring the Section 404 reports until a newly public company files its second annual report with the SEC, the Commission hopes to increase the efficiency and effectiveness with which those companies ultimately meet their Section 404 compliance obligations. %0AThe Commission seeks public input on this proposal from foreign and domestic companies, their financial and other advisors, investors and other interested members of the public. As with the proposed extension for smaller public companies, comments on this proposal should be submitted within 30 days of publication in the Federal Register. %0AThe Commission will continue to work on its own, and with the Public Company Accounting Oversight Board, to take several additional steps previously outlined on May 17, 2006, in SEC Press Release 2006-75 to improve the implementation of Section 404 so that it will work efficiently and effectively for companies and auditors of all sizes.
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In the situation where you have already had to assert under s404 as an accelerated filer I would be surprised if there were any relief granted for becoming smaller later. And to be honest given that the effort to comply with sox is front loaded I don’t understand why you would want to take a step backwards.
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I agree. THis is why the relief essentially applies to Foreig Private issuers as opposed to US Companies