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SEC to Reduce Number of SRCs Subject to Audits

By Stephen Barlas
August 1, 2019
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The U.S. Securities & Exchange Commission (SEC) wants to reduce the number of “small reporting companies” (SRC) that must have an independent ­auditor make a report on their internal controls.

 

Because of definitional changes the SEC made in 2018, some SRCs, formerly classified as nonaccelerated ­filers, were catapulted into either the accelerated filer or large accelerated filer category. Companies in those two categories need independent auditors to report on management’s assessment of the effectiveness of their internal control over financial reporting (ICFR).

 

The SEC is proposing to amend the definitions of accelerated filer and large accelerated filer to exclude any issuer that’s eligible to be an SRC under the revenue test, where the SRC threshold was raised in 2018 from less than $50 million to less than $100 million annually for companies with no public float.

 

Stephen Barlas has covered Washington, D.C., for trade and professional magazines since 1981 and since 1984 for Strategic Finance and its predecessor Management Accounting. You can reach him at sbarlas@verizon.net.
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