SEC Proposes Delay of Auditor Attestation Requirement For Non-Accelerated Filers

Earlier this month, the Securities and Exchange Commission ("SEC") proposed to extend for one additional year the deadline for non-accelerated filers to provide in their annual reports an attestation report from an independent auditor on internal control over financial reporting.[1] Currently, non-accelerated filers[2] will be required to provide an auditor attestation report in their annual reports filed for fiscal years ending on or after December 15, 2008. The proposed rule change would require such filers to provide auditor attestation reports in annual reports filed for fiscal years ending on or after December 15, 2009.

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BackgroundSection 404 of the Sarbanes-Oxley Act of 2002 requires public companies to comply with certain internal control over financial reporting ("ICFR") requirements, including the auditor attestation report ("Auditor Attestation") requirement in Item 308(b) of Regulation S-K. In 2006, as part of a series of SEC actions intended to improve implementation of the ICFR requirements, the SEC postponed the Auditor Attestation compliance date for non-accelerated filers to fiscal years ending on or after December 15, 2008.

The SEC has now proposed a further delay to allow the SEC to (i) conduct a study to determine whether the Auditor Attestation requirement is being implemented in a manner that will be cost-effective for smaller reporting companies, and (ii) consider forthcoming interpretive guidelines from the Public Company Accounting Oversight Board regarding ICFR audits of smaller public companies. The SEC believes that the delay is appropriate to prevent non-accelerated filers from incurring unnecessary compliance costs before the SEC is able to further analyze the effectiveness of the ICFR requirements.

Summary of Proposed Amendments

Under the SEC proposals:

  • Non-accelerated filers would be required to provide an Auditor Attestation in annual reports filed for fiscal years ending on or after December 15, 2009.
  • Until that time, non-accelerated filers would be required to state in their ICFR management reports (pursuant to Item 308(a) of Regulation S-K) that the company's annual report does not include an Auditor Attestation report.
  • ICFR management reports that are not accompanied by an Auditor Attestation would be considered "furnished" to the SEC rather than "filed," unless the filer specifically states that the report should be considered filed, or the report is incorporated by reference in another filing. As a result, such ICFR management reports would not be subject to liability under Section 18 of the Exchange Act.

Additional Information

The SEC is expected to issue final rules following the expiration of the comment period for the proposals on March 10, 2008. If you have any questions regarding these SEC proposals, please contact Jennifer Ammirati, the principal drafter of this client alert, or you may contact the Womble Carlyle attorney with whom you usually work or one of our Corporate and Securities attorneys.


[1] Internal Control Over Financial Reporting in Exchange Act Periodic Reports of Non-Accelerated Filers, Securities Act Release No. 33-8889 (February 1, 2008) (accessible at

[2] A "non-accelerated filer" is a reporting company that does not meet the definition of either an "accelerated filer" or a "large accelerated filer" under Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). It includes registrants whose aggregate market value of voting and non-voting common equity held by non-affiliates is less than $75 million as of the last day of the registrant’s most recently completed second fiscal quarter.