PSC Comments on SEC Proposal to Streamline Public Company Filer Status
The SEC’s proposed changes to filer status definitions have the PSC’s support, as they are intended to reduce complexity and compliance burdens. The proposal effectively balances the needs of investors with lowering costs for smaller companies.
In a letter to the SEC, TXCPA's Professional Standards Committee generally supports the SEC’s proposed rule to simplify filer status classifications for public companies and reduce regulatory complexity. The Committee endorses the creation of two primary filer categories—large accelerated filers (LAFs) and non-accelerated filers (NAFs)—and supports raising the LAF public float threshold to more than $2 billion, with periodic inflation-based reviews. However, it recommends shortening the proposed 60‑month seasoning period for LAF status to 24 months.
While expressing concern that the proposal would further reduce the scope of Sarbanes-Oxley Section 404(b) internal control audits, the Committee ultimately supports the expanded exemptions because it believes they appropriately balance investor protection with reduced compliance costs for smaller companies. The Committee notes that management would remain responsible for internal controls, auditors would still evaluate controls as part of financial statement audits, and companies subject to auditor attestation would continue to represent approximately 95% of U.S. public market capitalization.
In addition, the Committee observes that PCAOB inspections of internal control audits for smaller companies are often disproportionately rigorous and costly, with insufficient consideration given to the scalability of internal control requirements for smaller registrants.
Read the Proposed Rule here. View TXCPA PSC comment letter here.
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