SEC Updates Q & A on Smaller Reporting Companies Issues – Part I

The SEC recently updated its Q & A on a variety of other areas related to Regulation S-K, several of which apply to smaller reporting companies.

Question 102.01 asks the following:

Could a company with a fiscal year ended December 31, 2007 be both a “smaller reporting company,” as defined in Item 10(f), and an “accelerated filer,” as defined in Rule 12b-2 under the Exchange Act, for filings due in 2008, if it was an accelerated filer with respect to filings due in 2007 and had a public float of $60 million on the last business day of its second fiscal quarter of 2007?

Answer:  Yes

  • You have to look at both definitions to see if you qualify as both a smaller reporting company and as a non-accelerated filer for each year.
  • This company qualified as a smaller reporting company for 2008 filings, as 2007 was the initial year for such a determination, and it had less than $75 million in public float as of the end of its second fiscal quarter.
  • The company is an accelerated filer with respect to 2007 filings, as it needed under $75 million in public float to exit accelerated filer status.
  • This company could use the scaled disclosure rules for smaller reporting companies in its annual report on Form 10-K.
  • The 10-K would be due 75 days after its year end, because it is an accelerated filer.
  • It would need to have an auditors Section 404(b) attestation on its internal controls over financial reporting.

Kind of an interesting situation and one that companies need to continue to monitor.

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Joel M. Ungar, CPA is a lifelong resident of the Detroit area and a graduate of The University of Michigan. He is a principal with Silberstein Ungar, PLLC, a Top 15 auditor of SEC public reporting companies. Joel writes observations on different matters and especially on working with and using LinkedIn. He thinks he has a sense of humor.

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