H.R. 4139 Extends ExemptionBy
Small and medium-sized companies may get even more leeway than they have now with respect to one important federal requirement having to do with auditors. A bill before Congress would modify the Sarbanes-Oxley Act of 2002, which requires audit companies to attest to and report on the internal control assessment made by the management of the issuer. The Jumpstart Our Business Startups (JOBS) Act of 2012 gave emerging growth companies a five-year exemption from that requirement. Now the Fostering Innovation Act of 2015 (H.R. 4139) would extend the exemption to 10 years. That bill passed the House Financial Services Committee in March in a bipartisan vote of 42-15, making it a likely candidate for congressional passage.
The bill passed the committee in an “under the radar” fashion, but now opponents are gearing up to stop the bill. The opponents in question are a coalition of public interest groups put together by Americans for Financial Reform (AFR). The AFR says recent research by the Government Accountability Office has found that companies exempted from auditor attestation requirements show more accounting restatements, indicating that the financial reporting at these companies is deficient.