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SEC Issues Final Rule Removing Requirement for Auditor Attestation Report in Annual Reports of Nonaccelerated Filers

Published on: 17 Sep 2010

On September 15, the SEC finalized Rule 33-9142, Internal Control Over Financial Reporting in Exchange Act Periodic Reports of Non-Accelerated Filers. The rule amends certain SEC rules and forms to conform them to Section 404(c) of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), as added by Section 989G of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”). The amendments are effective as of the date the final rule is posted to the Federal Register.

The new rule indicates that before the Dodd-Frank Act was enacted, then-current SEC rules would have required nonaccelerated filers to include, in their annual report filed with the SEC, an attestation report on internal control over financial reporting made by their registered public accounting firm for fiscal years ending on or after June 15, 2010.

In addition, the final rule states that under Section 404(c) of the Sarbanes-Oxley Act, Section 404(b) is not applicable to “any audit report prepared for an issuer that is neither an accelerated filer nor a large accelerated filer as defined in Rule 12b-2 under the Securities Exchange Act of 1934 (the “Exchange Act”).”

The SEC also is adopting conforming rule changes that would (1) limit the applicability of management’s annual-report disclosure about including an attestation report to situations in which an attestation report is included and (2) amend Regulation S-X, Rule 2-02, to clarify that the audit reports of auditors of nonaccelerated filers are not required to include an evaluation of the issuer’s internal control over financial reporting.

Furthermore, the requirements of Section 404(a) of the Sarbanes-Oxley Act continue to apply to all issuers, including nonaccelerated filers (i.e., to include management’s report on the registrant’s internal control over financial reporting in the registrant’s annual report).

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