• SOX404 Auditor Attestations: One-Year Reprieve for Non-Accelerated Filers
  • July 14, 2008 | Author: Mark F. Hoffman
  • Law Firms: DLA Piper - Seattle Office ; DLA Piper - New York Office
  • Last week, the SEC granted non-accelerated filers an additional year before they will be required to provide auditor attestations regarding their internal controls.

    A “non-accelerated filer” is a reporting company that is neither an “accelerated filer” nor a “large accelerated filer” as defined in Rule 12b-2 of the Securities Exchange Act of 1934, which generally means that it has less than $75 million in worldwide public float held by non-affiliates. Please note that this change does not affect requirements regarding management’s assessment of internal controls.

    Background

    Under Section 404 of the Sarbanes-Oxley Act of 2002 and related regulations (SOX404), public companies other than registered investment companies must include in their annual reports:

    • management’s report on internal control over financial reporting; and
    • an attestation regarding internal controls from the company’s outside auditor.

    Current Deadlines

    Currently, non-accelerated filers are required to provide management’s assessment of internal controls in annual reports for fiscal years ending on or after December 15, 2007, and an auditor attestation for fiscal years ending on or after December 15, 2008.

    New Deadlines

    Under the new rules, which will be effective 60 days after publication in the Federal Register:

    • A non-accelerated filer will still be required to provide management’s report in annual reports for fiscal years ending on or after December 15, 2007, as under the current deadlines. Management reports included during the period before an auditor attestation is required will be deemed “furnished” rather than filed.
    • A non-accelerated filer must provide an auditor attestation of internal controls in annual reports for fiscal years ending on or after
      December 15, 2009.

    Accelerated filing status is determined at the end of the fiscal year based on a market-value test as of the last day of the most recently completed second fiscal quarter. Even if your company is a non-accelerated filer today, if it meets the definition of “accelerated filer” for 2008, it would become ineligible for the extension on the auditor attestation requirement.