Congress Could Widen Audit ExemptionBy
Sen. Mike Crapo (R.-Idaho), chairman of the Senate Committee on Banking, Housing, and Urban Affairs, started the capital formation hearings on February 28, 2019, by saying that any legislative package emerging from the committee will come from “identifying areas where we can find bipartisan consensus in the new Congress.”
That means chances are good that the Fostering Innovation Act of 2019 (S. 452) will be included in a Senate bill because it’s cosponsored by two Democrats and two Republicans.
The bill is designed to help emerging growth companies (EGCs), which are currently exempt from obtaining an external audit, increase the effectiveness of their internal controls for financial reporting. That exemption, which went into effect in 2012, ends five years after an EGC files for its initial public offering (IPO). The legislation would temporarily extend the exemption for an additional five years for EGCs with annual average revenue of less than $50 million and a public float of less than $700 million.
Jim Greenwood, president and CEO of the Biotechnology Innovation Organization (BIO), says, “Over 300 biotechnology companies have gone public since the JOBS [Jumpstart Our Business Startups] Act was enacted, and this important legislation will further promote capital formation while preserving investor protections.”