The accelerated filer and large accelerated filer definitions appear in Exchange Act Rule 12b-2. When classified as an accelerated or large accelerated filer, an issuer is subject to, among other things, the requirement that its outside auditor will attest to and report on management’s assessment of the effectiveness of the issuer’s internal control over financial reporting (ICFR). In the Jumpstart Our Business Startups (JOBS) Act of 2012, Congress exempted many new public issuers from this requirement for up to five years after going public.

With these amendments, smaller reporting companies that have been public for more than five years but with less than $100 million in revenues will continue to benefit from the JOBS Act exceptions. These companies are expected to establish and maintain effective internal control over financial reporting (ICFR). Principal executive and financial officers must continue to certify that they are responsible for establishing and maintaining ICFR and have evaluated and reported on the effectiveness of the company’s disclosure controls and procedures, among other responsibilities. In addition, smaller companies will continue to be subject to a financial statement audit by an independent auditor. This auditor is required to consider ICFR in the performance of that audit.

As a result of these amendments, these smaller companies will no longer be required to obtain a separate attestation of their ICFR from an outside auditor. This is unlike larger issuers. Smaller issuers will be able to redirect the associated cost savings into growing their businesses. Business development companies will receive analogous treatment as a result of the amendments.

Specifically, the amendments will:

• Exclude an issuer that is eligible to be a smaller reporting company and had annual revenues of less than $100 million in the most recent fiscal year for which audited financial statements are available from the accelerated and large accelerated filer definitions. Business development companies will be excluded in analogous circumstances.


• Increase the transition thresholds for an accelerated and a large accelerated filer becoming a non-accelerated filer from $50 million to $60 million and for exiting large accelerated filer status from $500 million to $560 million;


• Add a revenue test to the transition thresholds for exiting both accelerated and large accelerated filer status


• Add a check box to the cover pages of annual reports on Forms 10-K, 20-F, and 40-F to indicate whether an ICFR auditor attestation is included in the filing.

These amendments become effective 30 days after publication in the Federal Register. The changes apply to annual report filings due on or after this date.

Sources:

SEC Adopts Amendments to Reduce Unnecessary Burdens on Smaller Issuers by More Appropriately Tailoring the Accelerated and Large Accelerated Filer Definitions (www.sec.gov)

Amendments to the Accelerated Filer and Large Accelerated Filer Definitions (www.sec.gov)