The SEC adopted amendments to its rules and forms to conform them to new Section 404(c) of the Sarbanes-Oxley Act, as added by Section 989G of the Dodd-Frank Act. Section 404(c) provides that Section 404(b) of the Sarbanes-Oxley Act shall not apply with respect to any audit report prepared for an issuer that is neither an accelerated filer nor a large accelerated filer as defined in Rule 12b-29 under the Exchange Act. Prior to enactment of the Dodd-Frank Act, a non-accelerated filer would have been required, under existing SEC rules, to include an attestation report of its registered public accounting firm on internal control over financial reporting in the filer’s annual report filed with the SEC for fiscal years ending on or after June 15, 2010.
To conform the SEC’s rules to Section 404(c) of the Sarbanes-Oxley Act, these amendments remove the requirement for a non-accelerated filer to include in its annual report an attestation report of the filer’s registered public accounting firm. The SEC also adopted a conforming change to its rules concerning management’s disclosure in the annual report regarding inclusion of an attestation report to provide that the disclosure only applies if an attestation report is included. Lastly, the SEC made a conforming change to Rule 2-02(f) of Regulation S-X to clarify that an auditor of a non-accelerated filer need not include in its audit report an assessment of the issuer’s internal control over financial reporting.
All issuers, including non-accelerated filers, continue to be subject to the requirements of Section 404(a) of the Sarbanes-Oxley Act. Section 404(a) and its implementing rules require that an issuer’s annual report include a report of management on the issuer’s internal control over financial reporting.
We believe public companies exempted by the Dodd-Frank Act should consider whether obtaining an auditor’s attestation is desirable, particularly those who may soon meet the definition of an “accelerated filer” or those who may seek to be acquired or raise money in the capital markets.