On March 12, 2020, the SEC announced that it has adopted amendments to the “accelerated filer” and “large accelerated filer” definitions to “more appropriately tailor the types of issuers that are included in the definitions, thereby reducing unnecessary burdens and compliance costs for certain smaller issuers while maintaining investor protections.”

The amendments will exempt smaller reporting companies (SRCs) with less than $100 million in annual revenues from the requirement that their outside auditors attest to, and report on, management’s assessment of the effectiveness of the issuer’s internal control over financial reporting (ICFR). Management will continue to be required 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 and independent auditors will continue to consider ICFR when completing financial statement audits.

Consistent with the initial SEC proposal (see our IPO, Then What? blog post here), the amendments will:

• Exclude from the accelerated filer and large accelerated filer definitions a company that is eligible to be a smaller reporting company and had no revenues or annual revenues of less than $100 million in the most recent fiscal year for which audited financial statements are available;
• Increase the transition thresholds for an accelerated filer or a large accelerated filer becoming a non-accelerated filer from a public float of $50 million to $60 million and for exiting large accelerated filer status from a public float of $500 million to $560 million;
• Add a revenue test to the transition thresholds for exiting both accelerated filer and large accelerated filer status; and
• 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.

The table below from the SEC’s final rule summarizes the relationships between SRCs and non-accelerated, accelerated and large accelerated filers under the final amendments.

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