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Stradling

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Reuters Accounting & Compliance Alert and Thomson Reuters News & Insight
March 2019

In an effort to encourage more companies to go and stay public, the SEC staff has been drafting a proposal that would exempt more public companies from audits of financial controls. However, moving forward with this agenda will not be easy. Investor protection advocates are against the proposal because they believe effective controls over financial reporting instill greater investor confidence in a company’s results. On the other hand, business groups such as the U.S. Chamber of Commerce and Biotechnology Innovation Organization have been lobbying for broader exemptions because they believe the auditor rule is costly and does not offer much value to investors. If a majority of the commissioners decide to issue a proposal, the SEC will seek comments on amending the definition of accelerated filler in order to grant more exemptions to public companies. Stradling shareholder Chris Ivey, former co-chair of the firm’s Corporate and Securities practice group, claimed that “if the SEC moves ahead with amending the definition of accelerate filler, the agency in a way is trying to make its rules more consistent” and that “even if there are different definitions for a different set of SEC rules, many companies see them along the same lines as if there were one definition.” Read the full article.