Topic 4: Independent Accountants’ Involvement

4100 Qualifications of Accountants

Section	Description	LastUpdated
4110	PCAOB Registration	8/22/2025
4115	Revocation of PCAOB Registration	6/30/2011
4120	Duly Registered and in Good Standing Under the Laws of the Accountant’s Place of Residence or Principal Office [S-X 2-01]	9/30/2011
4125	Audit Firm Denied from Appearing or Practicing before the Commission – Rule 102(e) Action	8/22/2025
4130	Independence [S-X 2-01(b) and (c), SOX 201]	8/22/2025
4140	Lead Auditor [S-X 2-05, PCAOB AS 2101and AS 1206]	8/22/2025

> 4110 PCAOB Registration

4110.1 PCAOB Rule 2100 requires each firm (domestic or foreign) to register with the PCAOB that:

prepares or issues any audit report with respect to any issuer; or
plays a substantial role in the preparation or furnishing of an audit report with respect to any issuer.

4110.2 A public accounting firm not registered with the PCAOB may be able to perform some audit services for an issuer if the firm does not play a substantial role in the preparation or furnishing of the audit report as defined by PCAOB Rule 1001(p)(ii).

4110.3 In accordance with PCAOB Rule 2107(b)(1), a firm that was once registered and then later withdrew may reissue or give consent to the use of a prior period audit report that it issued while registered. However, the firm cannot update or dual-date a previously issued audit report after the firm is no longer registered, as that involves additional audit work.

4110.4 Issuer financial statements audited by a nonregistered firm are considered to be “not audited,” and any 10-K, proxy statement, or registration statement containing or incorporating by reference such financial statements is deemed materially deficient. In addition, the 10-K is deemed not timely filed. The 10- K or filing should be amended immediately to remove the nonregistered auditor’s report and label the columns of the financial statements as “not audited.” The issuer would then need to file another amendment to file financial statements audited by a registered firm.

4110.5 The following chart outlines the application of certain PCAOB requirements in various filings with the SEC.

(Last updated: 12/31/2022)

No.	Entities for which an audit report on the financial statements is included in the document filed with SEC1:	Auditor’s report on financial statements in current filing must be issued by a public accounting firm registered with the PCAOB?	Auditor’s report on financial statements must refer to PCAOB standards?
1	Issuer2 and its predecessor	Yes	Yes
2	Entity that has filed an initial registration statement	Yes	Yes
3a	Predecessor target company whose financial statements are filed by a special purpose acquisition company (“SPAC”)	Yes	Yes
3b	Non-predecessor target company whose financial statements are filed by a SPAC.	Yes	Yes
3c	Operating company (predecessor) whose pre-acquisition financial statements are filed by an issuer that at the time the reverse merger is consummated is a public “shell company” (See Section 12250.1)	Yes	Yes
3d	Operating company (predecessor) whose pre-acquisition financial sta tements are filed by an issuer that at the time the reverse merger is consummated is not a public “shell company”	No, but see Section 12250.2	No, but see Section 12250.2
3e	Operating company (predecessor) whose post-acquisition audited financial statements are filed by the issuer after consummation of a reverse merger	Yes	Yes
4	Non-issuer subsidiary, division, branch, component or investment for which an audit report is filed under S-X 2-05	See footnote3	Yes4
5	Non-issuer entity whose financial statements are filed to satisfy S-X 3-05 or 3-145	No	No
6	Non-issuer entity whose financial statements are included in proxy statement or Form S-4/F-4 as target (except for the target of a SPAC in Form S-4/F-4, then follow 3a or 3b above)	No	No
7	Non-issuer entity whose financial statements are filed to satisfy S-X 3-09	See footnote3	See footnote6
8	Subsidiary issuer or guarantor of guaranteed debt or debt-like securities whose separate financial statements are filed because it does not qualify for relief under S-X 3-10 (see Section 2500)	Yes7	Yes
9	Employee benefit plan filing Form 11-K	Yes7	Yes
10	Regulation A issuer	No8	No8
11	Auditedbalance sheet of non-issuer general partner in transactional filings or registration statement of a limited partnership issuer	No	No

4110.6 [Reserved]

4110.7 [Reserved]

4110.8 [Reserved]

> 4115 Revocation of PCAOB Registration

4115.1 If the PCAOB revokes the registration of a public accounting firm, audit reports issued by that firm may no longer be included in a registrant’s filings made on or after the date the firm’s registration is revoked, even if the report was previously issued before the date of revocation. Financial statements previously audited by a firm whose registration has been revoked would need to be reaudited by a PCAOB registered firm prior to inclusion in future filings or if included in a registration statement that has not yet been declared effective.

4115.2 In providing the information required by Item 304 of Regulation S-K regarding a change in accountants, a company should indicate that the PCAOB has revoked the registration of its prior auditor. If a company explains the PCAOB registration revocation in its Item 4.01 Form 8-K, it need not repeat this disclosure in its next Form 10-K.

> 4120 Duly Registered and in Good Standing Under the Laws of the Accountant’s Place of Residence or Principal Office [S-X 2-01]

4120.1 The SEC will not recognize any person as a certified public accountant unless duly registered (licensed to practice) and in good standing under the laws of the place of the accountant’s residence or principal office. [S-X 2-01(a)] However, S-X 2-01(a) does not affect the applicability of any other registration, licensing or qualification requirements that may apply in any State or jurisdiction.

4120.2 The staff may question the location from which the audit report was rendered if there does not appear to be a logical relationship between that location and the location of the registrant’s corporate offices, its principal operations, its principal assets, or where the audit work was principally conducted. The staff will consider all relevant factors in questioning the location from which the audit report was rendered.

4120.3 An auditor whose report is included in a registrant’s filings should be an expert in the standards of the PCAOB (U.S. GAAS for non-issuers), and U.S. GAAP, or IFRS, as applicable.

> 4125 Audit Firm Denied from Appearing or Practicing before the Commission – Rule 102(e) Action

4125.1 If the Commission denies, temporarily or permanently, an audit firm from appearing or practicing before the Commission as an accountant pursuant to Rule 102(e) of the Commission’s Rules of Practice, audit reports issued by that firm may no longer be included in a registrant’s filings made on or after the date of Rule 102(e) order, even if the report was previously issued before the date of order. Financial statements previously audited by a firm who has been denied the privilege of appearing or practicing before the Commission pursuant to Rule 102(e) would need to be reaudited by a firm that is currently permitted to appear or practice before the Commission prior to inclusion in future filings or if included in a registration statement that has not yet been declared effective.

4125.2 In providing the information required by Item 304 of Regulation S-K regarding a change in accountants for a firm that is no longer permitted to appear or practice before the Commission, a company should indicate that the prior auditor is not currently permitted to appear or practice before the Commission. If a company includes such disclosure in its Item 4.01 Form 8-K, it need not repeat this disclosure in its next Form 10-K.

> 4130 Independence [S-X 2-01(b) and (c), SOX 201]

4130.1 Questions regarding compliance with S-X 2-01 independence rules should be directed to OCA - SEC.gov | Office of the Chief Accountant: Application of the Commission's Rules on Auditor Independence. OCA may direct questions regarding compliance with PCAOB rules to the PCAOB. Auditor reports on financial statements that refer to PCAOB standards must comply with the independence rules of both the SEC and the PCAOB. The SEC’s independence rules are promulgated in S-X 2-01. The PCAOB has also issued certain independence and ethics rules, which are part of its adopted standards. See Ethics & Independence Rules | PCAOB.

4130.2 S-X 2-01 is designed to ensure that auditors are qualified and independent of their audit clients both in fact and in appearance. Accordingly, the rule sets forth restrictions, including but not limited to, on financial, employment, and business relationships between an accountant and an audit client and restrictions on an accountant providing certain non-audit services to an audit client. These restrictions are prescribed in paragraphs (c)(1) to (c)(8) of S-X 2-01. The general standard of independence is set forth in S-X 2-01(b). The rule does not purport to, and the Commission could not, consider all the circumstances that raise independence concerns, and these are subject to the general standard in paragraph 2-01(b). In considering this standard, the Commission looks in the first instance to whether a relationship or the provision of a service: (a) creates a mutual or conflicting interest between the accountant and the audit client; (b) places the accountant in the position of auditing his or her own work; (c) results in the accountant acting as management or an employee of the audit client; or (d) places the accountant in a position of being an advocate for the audit client. See also Office of the Chief Accountant: Application of the Commission's Rules on Auditor Independence Frequently Asked Questions available here, which do not reflect any adjustments for the Final Rule: Qualifications of Accountants.

4130.3 SEC Independence rules also apply to Regulation A, except for Tier 1 offerings where the AICPA independence standards may be applied and Regulation D filings, and when separately audited financial statements of an equity investee is included in a filing under Rule 3-09 of Regulation S-X. [Form 1-A Part F/S and Section O. Other Independence in OCA: Application of the Commission’s Rules on Auditor Independence Frequently Asked Questions available here.]

> 4140 Lead Auditor [S-X 2-05, PCAOB AS 2101 and AS 1206]

4140.1 When an independent auditor involves other auditors or referred-to auditors to audit the financial statements of one or more subsidiaries, divisions, branches, components, or investments included in the financial statements presented, such independent auditor must decide whether it may serve as the lead auditor. Generally, the lead auditor is expected to have audited or assumed responsibility for reporting on at least 50% of the assets and revenues of the consolidated entity. If it is impracticable for a lead auditor to assume that extent of responsibility for one or more of the periods presented, the staff will evaluate whether to accept the audit reports as sufficient for reliance in filings with the SEC depending on the facts and circumstances.

In an integrated audit of a company’s financial statements and its internal control over financial reporting that involves other auditors or referred-to auditors, the lead auditor of the financial statements must participate sufficiently in the audit of internal control over financial reporting to provide a basis for serving as the lead auditor of internal control over financial reporting. Only the lead auditor of the financial statements can be the lead auditor of internal control over financial reporting.

4140.2 A lead auditor must decide whether to assume responsibility for the work of the other auditor or, divide responsibility for the audit with one or more referred-to auditors. If the lead auditor decides to assume responsibility for the work of the other auditor insofar as that work relates to the lead auditor’s expression of an opinion on the financial statements taken as a whole, no reference should be made to the other auditor’s work or report.

4140.3 If a lead auditor divides responsibility for the audit work of one or more referred-to auditors, insofar as that work relates to the lead auditor’s expression of an opinion on the financial statements taken as a whole, and if applicable, ICFR, the lead auditor’s report should make reference to the audit of the referred–to auditor and should indicate clearly the division of responsibility between the lead auditor and the referred-to auditor in expressing his opinion on the financial statements and if applicable, ICFR. The referred-to auditor remains responsible for the performance of its own work and for its own report.

4140.4 If a lead auditor makes reference to the work of the referred-to auditor in the lead auditor’s report on either the financial statements or ICFR, the separate report of the referred-to auditor shall be filed. [S-X 2-05]

4140.5 If a lead auditor makes reference to the audit and auditor’s report of the referred-to auditor in the lead auditor’s report, the referred-to auditor must comply with all requirements with which the lead auditor must comply, with the exception of PCAOB registration when the referred-to auditor does not meet the “substantial role” threshold defined in PCAOB Rule 1001(p)(ii) in the audit of the issuer. Regardless of whether the lead auditor assumes or divides responsibility for the audit, the other auditor or referred-to auditor must register with the PCAOB if it meets the “substantial role” threshold defined in PCAOB Rule 1001(p)(ii) in the audit of the issuer.

4200 Accountants’ Reports [S-X 2-02, PCAOB AS 3101 and AS 3105]

Section	Description	Last Updated
4210	General – Audit Reports	8/22/2025
4220	Qualified Audit Reports	8/22/2025
4230	Other Report Modifications	6/30/2009
4240	Critical Audit Matters [AS 3101]	8/22/2025
4250	Audit Reports on Abbreviated Financial Statements	8/22/2025

> 4210 General — Audit Reports

4210.1 The accountant’s report must be dated, electronically signed [S-T 302(a)], indicate the city and state where issued, include a statement containing the year the auditor began serving consecutively as the company’s auditor, and identify the financial statements covered.

4210.2 The report should refer to any supplemental schedules presented pursuant to SX Article 12 (or a separate report on those schedules may be included with the schedules).

4210.3 The report must contain clear statements as to the scope of the audit. It must include representations that the audit is conducted in accordance with the standards of the PCAOB (United States) for issuers or applicable professional standards (that is, U.S. GAAS as issued by the AICPA) for non-issuers (with certain exceptions noted in Section 4210.4). Refer to the guidance in PCAOB AS 3101 for the required elements of an unqualified opinion under PCAOB standards, including communication regarding critical audit matters (see section 4240), as applicable.

4210.4 Audit reports on non-issuer financial statements in SEC filings may, but are not required to, refer to PCAOB standards, except in certain cases. An audit of non-issuer financial statements must be conducted in accordance with PCAOB standards if the issuer’s lead auditor makes reference to the work performed by the non-issuer auditor. Non-issuer financial statements can only be audited in accordance with U.S. GAAS or PCAOB Standards, except that non-issuer financial statements presented in an MJDS form may be audited in accordance with Canadian GAAS, depending on the facts and circumstances (see 6820.3).

4210.5 The report must contain a clear statement as to whether in the auditor’s opinion that the financial statements are presented in conformity with GAAP, and any exceptions taken. All financial statements must be prepared in accordance with U.S. GAAP for domestic issuers. Foreign private issuers may present their financial statements in accordance with IFRS as issued by the IASB without a reconciliation to U.S. GAAP, or in accordance with non-IFRS home-country GAAP reconciled to U.S. GAAP as permitted by Form 20-F.

> 4220 Qualified Audit Reports

The audit report that an independent auditor issues under PCAOB standards (or U.S. GAAS for non-issuers) may indicate that the financial statements do not satisfy the requirements of the SEC's rules or the audit procedures applied omitted certain procedures deemed necessary by the auditor. There may be rare instances when the staff will not object to an audit report on the financial statements that contains a qualification. However, a waiver from CF-OCA would need to be requested and obtained before filing. Examples of audit reports on the financial statements that represent a material deficiency in the filing are set forth in 4220.1 through 4220.4. In material deficiency situations, the related filing, e.g. Form 10-K, is deemed not timely filed and would impact compliance with certain rule and form eligibility requirements – such as, Regulation S, Rule 144, Form S-3 and Form S-8.

4220.1 Disclaimer of Opinion S-X Article 2 requires the clear expression of an opinion on the financial statements. A report that states that the auditor is disclaiming an opinion on the financial statements for any reason does not satisfy the requirements of S-X Article 2.

4220.2 Adverse Opinion

An audit report that states that the financial statements taken as a whole are not presented fairly in conformity with GAAP does not satisfy the requirements of S-X Article 2.

4220.3 Scope Qualifications [SAB Topic 1E.2]

A qualification with respect to the scope of the audit of the financial statements results in a finding by the staff that the audit of the financial statements required by SEC rules has not been performed.
Sometimes an auditor is not present for observation of inventory. In that case, the auditor must be able to satisfy himself or herself through alternative procedures. No language in the report should imply a qualification as to scope or conclusions. [FRC 607.01]

4220.4 Qualifications as to Accounting Principles or Disclosures [SAB Topic 1E.2]

Audit reports that express a qualified or “except for” opinion due to a departure from GAAP do not meet the requirements of S-X Article 2. Financial statements not in conformity with GAAP are presumed to be inaccurate or misleading, notwithstanding explanatory disclosures in footnotes or in the accountant’s report. [FRC 607.01]

4220.5 In the case of an auditor’s issuance of an adverse opinion on a company’s ICFR, the auditor should determine the effect an adverse opinion on ICFR has on the auditor’s opinion on the financial statements. An auditor should disclose whether or not an adverse opinion on ICFR affected its audit opinion on the financial statements. [AS 2201, paragraph 92]

4220.6 Audit Report - IFRS-IASB financial statements for an Acquired Business

Financial statements of an acquired or to-be-acquired business prepared in accordance with IFRS-IASB, require comparative financial statements in accordance with IAS 1 and IAS 34. However, if only one year of audited financial statements are required by the S-X Acquisition Rules based upon the level of significance (Refer to Section 2930), the staff would not object to the inclusion of an audit report containing a qualified opinion with respect only to the lack of comparative information.

> 4230 Other Report Modifications

4230.1 Going Concern Modifications [AS 2415]

Going concern modifications are required by PCAOB standards and U.S. GAAS in certain circumstances.
Filings that include reports having going concern modifications must also include appropriate and prominent disclosure of the financial difficulties giving rise to that uncertainty. Discussion of a viable plan that has the capability of removing the threat to the continuation of the business must be included. The plan may include a “best efforts” offering so long as the amount of minimum proceeds necessary to remove the threat is disclosed. The plan should enable the issuer to remain viable for at least the 12 months following the date of the financial statements being reported on. If management has no viable plan, the use of going concern financial statements may be inappropriate and liquidation-basis financial statements may be necessary or the classification and amounts of assets and liabilities may need to be adjusted. [FRC 607.02] AU 341 does not apply to an audit of financial statements based on the assumption of liquidation.
Going concern opinions that do not use the words “substantial doubt” when referencing a going concern matter do not comply with PCAOB standards/U.S. GAAS.
Going concern opinions that use conditional language in expressing a conclusion concerning the existence of substantial doubt about the entity’s ability to continue as a going concern are not appropriate.
A disclaimer of opinion, “except for” opinion, or an adverse opinion resulting from going concern matters is permitted by AS 2415, but none of these types of opinion comply with the requirements of S-X Article 2.

4230.2 Changes in Accounting Principles [ASC 250, AS 2820, S-X 10-01]

A change in accounting principle that has a material effect on the financial statements should be recognized in the auditor’s report. [AS 2820, paragraph 8]
The correction of a material misstatement in previously issued financial statements should be recognized in the auditor’s report on the audited financial statements through the addition of an explanatory paragraph. [AS 2820, paragraph 9]
Preferability Letters
The presumption that an entity should not, in the absence of the issuance of a new accounting standard, change an accounting principle may be overcome only if the company justifies the use of an alternative acceptable accounting principle on the basis that it is preferable. [ASC 250-10-45-12] The registrant is required to file a letter from its independent accountant concurring with its conclusion as to the new method’s preferability. [S-X 10-01; SAB Topic 6G.2.b]
1. Preferability letters must be included in Form 10-Q or Form 10-K as Exhibit 18 and need only be filed once in the first applicable 1934 Act filing following the change. Preferability letters are not required in 1933 Act filings. A preferability letter generally is required in Form 10-K only when a change in accounting occurs in the fourth quarter. Even though the independent accountant referred to the change in its audit report as required by PCAOB standards and concluded as to the preferability of the change, S-K 601 requires that a preferability letter be included as an exhibit to the Form 10-K (unless it was previously filed).
2. The staff has objected to the change from one acceptable method to another acceptable method if the registrant and its independent accountants cannot demonstrate that the new method is preferable. Conforming to industry practice may not justify a change if industry practice is not the preferable method.
3. Preferability letters are not required after a business combination where changes in the acquired entity's accounting are made to conform to those of the acquiring entity.
4. A preferability letter is not required for a change in estimate effected by a change in accounting principle.
5. A preferability letter is not required for changes that are mandatory or will be mandatory.

4230.3 Clarification in Audit Report Regarding No Audit of Internal Control Over Financial Reporting [SOX 404(b), S-K 308(b), AS 3105]

In a financial statement audit of an issuer or non-issuer that has determined it is not yet required to obtain, nor did it request the auditor to perform, an audit of internal control over financial reporting under SOX 404(b) and S-K 308(b), a firm may, but is not required to, expand its audit report to clarify this fact. A firm may include a statement that the purpose and extent of the auditor’s consideration of internal control over financial reporting was to determine that the nature, timing, and extent of tests to be performed are appropriate in the circumstances, but was not sufficient to express an opinion on the effectiveness of internal control over financial reporting. If a firm chooses to expand its report to clarify this point, the scope paragraph in the audit report should follow the suggested language in AS 3105.59 to .60.

4240 Critical Audit Matters [AS 3101]

4240.1 A Critical Audit Matter (“CAM”) is any matter arising from the audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved especially challenging, subjective, or complex auditor judgment. AS 3101 states that it is expected that, in most audits, the auditor would determine that at least one matter involved especially challenging, subjective, or complex auditor judgment.

4240.2 Critical audit matters are not required for audits of emerging growth companies (EGCs) [AS 3101.05.b]

If the auditor of Company A, an EGC, makes reference to the audit report of a referred-to auditor for Company X, a non-issuer equity method investment of Company A, the audit report of Company X is required to refer to PCAOB standards (i.e., a US GAAS/PCAOB report). The audit report on Company X would not be required to include CAMs since Company A is an EGC. However, if Company A is not an EGC, the registrant may consult with the staff in CF-OCA as to whether CAMs would be required in the audit report for Company X.

4240.3 In a de-SPAC transaction where the target would qualify as an EGC, a PCAOB audit report for the target included in the Form S-4/proxy statement(s)/Super 8-K may exclude CAMs.

4250 Audit Reports on Abbreviated Financial Statements

4250.1 In certain circumstances, abbreviated financial statements (e.g., statement of assets acquired and liabilities assumed and statement of revenues and direct expenses) may be filed in lieu of full financial statements under Regulation S-X. See section 2935.

4250.2 Compliance with PCAOB standards is not required for an audit of financial statements of a non-issuer required by S-X Rules 3-05 and 3-14 (see 4110.5). The applicable AICPA Standard is AU-C 805, Special Considerations – Audits of Single Financial Statements and Specific Elements, Accounts, or Items of a Financial Statement. AU-C 805.24 requires an emphasis-of-a-matter paragraph when reporting on an incomplete presentation that is otherwise in accordance with GAAP. The emphasis-of-a-matter paragraph should (i) state the purpose for which the presentation is prepared and refer to a note in the financial statements describing the basis of presentation and (ii) indicate that the presentation is not intended to be a complete presentation of the entity’s assets, liabilities, revenues, or expenses.

4250.3 For audits of non-issuer abbreviated financial statements presented in accordance with IFRS, the audit report should be prepared in accordance with AICPA Standards, including the emphasis-of-a-matter paragraph in AU-C 805.24. The emphasis-of-a-matter paragraph would (i) make reference to the basis of presentation discussion in the notes (where the issuer would not be able to state that the basis of presentation of presentation is in accordance with IFRS for abbreviated financial statements since IAS 1.16 states that “[a]n entity shall not describe financial statements as complying with IFRS unless they comply with all the requirements of IFRSs” and (ii) clarify that the presentation is not intended to be complete (i.e., a “complete set of financial statements” per IAS 1.10). Questions regarding referencing the applicable accounting framework in the opinion paragraph can be directed to the staff in CF-OCA.

4250.4 PCAOB AS 3305.11-18, Special Reports applies for audits of abbreviated financial statements voluntarily performed under PCAOB Standards. PCAOB standards do not require an emphasis-of-a-matter paragraph in this instance, but including it would not be precluded (see AS 3101.19, The Auditor's Report on an Audit of Financial Statements When the Auditor Expresses an Unqualified Opinion for discussion of emphasis-of-a-matter paragraphs). In audits of abbreviated financial statements prepared in accordance with IFRS, the auditor should consider including an emphasis-of-a-matter paragraph with language similar to that required by AU-C 805.24 for audits performed under AICPA standards. Questions regarding referencing the applicable accounting framework in the opinion paragraph can be directed to the staff in CF-OCA.

4300 REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING [SOX 404, AS 2201 and S-K 308, SEC Interpretive Guidance, ICFR FAQs, PCAOB Staff Guidance]

Section	Description	Last Updated
4310	Management’s Annual Report on Internal Control Over Financial Reporting [S-K 308]	6/30/2009 unless otherwise noted
4320	Auditor’s Report on ICFR [AS 2201, S-X 2- 02(f)]	6/30/2009 unless otherwise noted

> 4310 Management’s Annual Report on Internal Control Over Financial Reporting [S-K 308]

4310.1 S-K 308(a) requires management to provide its report on ICFR containing its assessment of the effectiveness of ICFR as of the end of the most recent fiscal year in its annual report on Form 10-K, 20-F, or 40-F (including transition reports filed on such forms upon a change in fiscal year-end). If the registrant is a non-EGC accelerated filer or a large accelerated filer, S-K 308(b) requires management to provide the registered public accounting firm’s attestation report on the registrant’s ICFR. Filings without the required report or reports are materially deficient and considered not timely, except for the limited situation described in Section 4310.6 below. Non-accelerated filers (both domestic and foreign) and EGCs (both domestic and foreign) are not required to include an auditor attestation report under S-K 308(b).

NOTE: Management’s report on ICFR and the accompanying attestation report are not required in registration statements (whether under the 1933 Act or 1934 Act) or Forms 11-K. However, such reports may be incorporated by reference into a registration statement to the extent the instructions for the registration statement require incorporation by reference of the annual report form which includes Management's report on ICFR and any accompanying attestation report. (Last updated: 8/22/2025)

4310.2 A non-EGC that enters accelerated filer status at the end of a fiscal year (based upon its public float as of the end of its second fiscal quarter) is required to include an auditor attestation report in the Form 10-K for that year. Similarly, a company that exits accelerated filer status at the end of its fiscal year (for example, based upon its public float as of the end of its second fiscal quarter) would not be required to include an auditor attestation report in the Form 10-K for that year. (Last updated: 6/30/2013)

4310.3 The staff’s Management’s Report on Internal Control Over Financial Reporting and Certification of Disclosure in Exchange Act Periodic Reports, Frequently Asked Questions (“ICFR FAQs”) is available at http://www.sec.gov/info/accountants/controlfaq.htm.

4310.4 [Reserved]

4310.5 [Reserved]

4310.6 Pursuant to S-K 308, a newly public company need not provide management’s report on ICFR until it either had been required to file or had filed a Form 10-K with the Commission for the prior fiscal year. A company that historically reported under the Exchange Act as a voluntary filer or because of debt whose offer and sale was registered under the Securities Act of 1933, and therefore filed annual reports up to and through the date of its IPO, in which it was required to comply with the disclosures required by Item 308(a) of Regulation S-K, is therefore required to provide management’s report on ICFR in its first annual report following the IPO.

Only “accelerated filers” that are not EGCs and “large accelerated filers” are required to provide an auditor’s attestation report on ICFR under Item 308(b) of Regulation S-K. The definitions of “accelerated filer” and “large accelerated filer” require that the issuer has been subject to reporting under Section 13(a) or 15(d) and has filed at least one annual report. Newly public companies and companies that historically reported under the Exchange Act as voluntary filers or because of registered debt do not satisfy the definitions of “accelerated filer” or “large accelerated filer” for purposes of their first annual report following their IPO, and therefore are not required to include an auditor’s attestation report on ICFR under S-K 308(b) in that first annual report.

A registrant should include a statement in its first annual report in substantially the following form:

"This annual report does not include a report of management’s assessment regarding internal control over financial reporting or an attestation report of the company’s registered public accounting firm due to a transition period established by rules of the Securities and Exchange Commission for newly public companies." [Instruction 1 to S-K 308] (Last updated: 6/30/2013)

4310.7 The framework on which management bases its evaluation of ICFR must be a suitable, recognized control framework. Many companies follow the COSO framework, but other frameworks are also acceptable. In assessing effectiveness, management evaluates whether its ICFR system addresses the elements of internal control that its chosen framework describes as necessary for an internal control system to be effective. There are no specifically required methods or procedures for evaluating ICFR, so it will vary from company to company. Management will have to use its best judgment. The evaluation must be based on procedures sufficient to evaluate both the design and operating effectiveness of ICFR. In June 2007, the SEC issued interpretative guidance regarding management’s report on ICFR. [Release No. 33-8810] An evaluation following this interpretative guidance is one way to satisfy the evaluation requirements of ICFR.

Under any method of evaluating ICFR, management must attain a level of "reasonable assurance" when making conclusions about the effectiveness of ICFR. While “reasonable assurance” is a high level of assurance, it does not mean absolute assurance. The term “reasonable assurance” relates to similar language in the Foreign Corrupt Practices Act. 1934 Act Section 13(b)(7) defines “reasonable assurance” as the degree of assurance that would satisfy prudent officials in the conduct of their own affairs. There is a range of judgments that an issuer might make as to what is reasonable in implementing SOX 404 and the SEC’s rules.

4310.8 S-K 308 does not specify the exact content of management’s annual report on ICFR. Management should tailor the wording of the report to fit its company’s particular circumstances. However, management’s annual report on ICFR must state or disclose the following:

Management’s responsibility for establishing and maintaining adequate ICFR for the company.
The framework used by management as criteria for evaluating the effectiveness of ICFR.
Management’s assessment of the effectiveness of the company’s ICFR at year end, including a statement as to whether or not ICFR is effective.
Any material weaknesses in the company’s ICFR identified by management (See Section 4320.8 for definition of material weakness).
The fact that the company’s independent public accountant, who audited the financial statements included in the annual report, has issued an attestation report on the company’s ICFR (if applicable).

4310.9 Management must reach one of two conclusions for its assessment of ICFR – ICFR is either effective or not effective. Management cannot conclude that its ICFR is effective if there are one or more material weaknesses. Additionally, management cannot qualify its conclusion by stating that its ICFR is effective with certain qualifications or exceptions. However, management may state that its controls are ineffective for specific reasons. Because of the substantial overlap between ICFR and DCP, if management concludes that ICFR is ineffective, it would likely conclude that DCP is also ineffective. (Last updated: 8/22/2025)

4310.10 In certain circumstances, management may encounter difficulty in assessing certain aspects of ICFR. Management must still conclude whether ICFR is effective or not since management is not permitted to issue a report with a scope limitation (except under the limited circumstances described in Section 4310.11). Therefore, management must determine whether an inability to assess certain aspects of ICFR is significant enough to conclude that ICFR is not effective.

4310.11 If management does not have the ability to assess certain aspects of ICFR, management must conclude whether ICFR is effective or not, taking into consideration any scope limitation. Scope limitations are not permitted in management’s report, except for the following limited exceptions (see 4310.3 for link to FAQs referenced):

A variable interest entity in existence prior to December 15, 2003 that is consolidated AND the registrant does not have the right or authority to assess the internal controls of the consolidated variable-interest entity and also lacks the ability, in practice, to make that assessment. A similar exception is available for an entity accounted for via proportionate consolidation in accordance with ASC 810-10-45-14 if management does not have the ability to assess ICFR. [ICFR FAQ 1]
Equity method investments. [ICFR FAQ 2]
A current year acquisition (includes initial consolidation resulting from becoming the primary beneficiary of a variable interest entity) when it is not possible to conduct an assessment of the acquired business’s ICFR in the period between the consummation date and the date of management’s assessment. The exclusion may not extend beyond one year from the date of the acquisition nor may it be omitted from more than one annual management report on ICFR. [ICFR FAQ 3] (Last updated: 9/30/2010)
A reverse acquisition between an issuer and a private operating company when it is not possible to conduct an assessment of the private operating company or accounting acquirer’s ICFR in the period between the consummation date of a reverse acquisition and the date of management’s assessment of ICFR. See the Division of Corporation Finance’s C&DIs for Regulation S-K, Question 215.02.

For foreign private issuers who file their financial statements in their home country GAAP, management's evaluation of ICFR should consider, in addition to controls related to preparation of the primary financial statements, controls related to the preparation of the U.S. GAAP reconciliation because the reconciliation is a required element of the financial statements. [ICFR FAQ 12] (Last updated: 9/30/2010)

4310.12 Management should consider disclosing the following with respect to a material weakness:

Describe the nature of the material weakness;
Describe its impact on the financial reporting and ICFR, if any; and
Describe management’s current plans or action already undertaken, if any, for remediating the material weakness.

4310.13 Management must communicate all significant deficiencies and material weaknesses it detects to the audit committee and external auditor. The SOX 302 certifications include an affirmative statement to this effect. Management must also provide written representations to the auditor regarding its internal controls.

4310.14 S-K 308 does not specify where management’s internal control report must appear in the annual report on Form 10-K, but it should be located in close proximity to the corresponding attestation report issued by the company’s auditor. [Release No. 33-8238] Management’s report is not required to have a title. Management’s report does not need to be dated or signed, but may include the date and/or the names or signatures of management.

4310.15 Our rules do not address whether the assessment of ICFR covers supplementary financial information, Regulation S-X schedules, or ASC 932 oil and gas disclosures. Internal controls over supplementary information do not need to be included in an assessment of ICFR, although adequate internal controls over the preparation of supplementary information are required. [ICFR FAQ 11]

4310.16 When a company restates its financial statements to correct errors in the financial statements, a company may need to reevaluate the effectiveness of its internal controls and/or reissue a revised management’s report on ICFR. A company may need to consider whether or not its original disclosures in management’s report continue to be appropriate in light of these errors, and should modify or supplement its original disclosure to include any other material information that is necessary for such disclosures not to be misleading in light of the restatement. The company should also disclose any material changes to ICFR, as required by S-K 308(c). (Last updated: 8/22/2025)

4310.17 If a company’s management concludes that its original assessment of ICFR was incorrect, it should consider whether or not to revise its original report on ICFR. A company should also reevaluate the appropriateness of its prior disclosures regarding the effectiveness of the company’s DCP and make any necessary revisions. For example, a company disclosed that its Chief Financial Officer and Chief Executive Officer concluded its DCP were effective in its original Form 10-K. Subsequently, the company filed a Form 10-K/A to restate its financial statements for errors. In the Form 10-K/A, the company revised its disclosures to state that the Chief Financial Officer and Chief Executive Officer concluded its DCP were not effective, and the reasons why they were not effective.

> 4320 Auditor’s Report on ICFR [AS 2201, S-X 2-02(f)]

4320.1 AS 2201 requires an auditor to perform an audit of a company’s ICFR that is integrated with an audit of the financial statements. A report on the audit of ICFR, which may be combined with or separate from the report on the financial statements, must include the following:

A title that includes the word independent;
The auditor’s opinion on whether the company maintained, in all material respects, effective internal control over financial reporting as of the specified date, based on the control criteria;
A statement that management is responsible for maintaining effective internal control over financial reporting and for assessing the effectiveness of internal control over financial reporting;
An identification of management’s report on internal control;
A statement that the auditor’s responsibility is to express an opinion on the company’s internal control over financial reporting based on his or her audit;
A statement that the audit was conducted in accordance with the standards of the PCAOB (United States);
A statement that the standards of the PCAOB require that the auditor plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects;
A statement that an audit includes obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal controls based on the assessed risk and performing such other procedures as the auditor considered necessary in the circumstances;
A statement that the auditor believes the audit provides a reasonable basis for his or her opinion;
A definition of internal control over financial reporting as stated in AS 2201, paragraph A5;
A paragraph stating that, because of inherent limitations, internal control over financial reporting may not prevent or detect misstatements and that projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate;
The manual or electronically signed signature of the auditor’s firm;
The city and state (or city and country, in the case of non-U.S. auditors) from which the auditor’s report has been issued; and
The date of the audit report.

(Last updated: 8/22/2025)

(Last updated: 8/22/2025)

4320.2 In addition, S-X 2-02(f) requires the audit report on ICFR to identify the period covered by the report.

4320.3 If the audit report on ICFR is separate from the audit report on the financial statements, both reports must be dated the same. See paragraphs 87-88 of AS 5 for sample Illustrative Reports on Internal Control Over Financial Reporting.

4320.4 AS 2201 requires the auditor to modify its report on ICFR if any one of the following five conditions exists:

Elements of management’s annual report on internal control are incomplete or improperly presented;
There is a restriction on the scope of the engagement;
The auditor decides to refer to the report of other auditors as the basis, in part, for the auditor’s own report;
There is other information contained in management’s annual report on internal control over financial reporting; or
Management’s annual certification pursuant to SOX 302 is misstated. [AS 2201, paragraphs C1-C15]

The report modification may be in one of the following forms, depending on the condition:

an explanatory paragraph;
an adverse opinion; or
a disclaimer of opinion.

4320.5 The auditor’s report on ICFR should clearly state whether or not it is the auditor’s opinion that a company maintained, in all material respects, effective ICFR at year end. It is not appropriate for the report to state that ICFR is effective with certain qualifications or exceptions. For example, language indicating that the company maintained effective ICFR, except for a certain weakness in a control, is not acceptable. Language indicating that the company maintained ICFR that are “sufficiently effective” or “adequate” is also not appropriate.

4320.6 The auditor must express an adverse opinion on the company’s ICFR when one or more material weaknesses in ICFR exist, unless there is a restriction on the scope of the engagement. See Section 4320.12. An adverse opinion on ICFR must include:

The definition of a material weakness; and
A statement that a material weakness has been identified and an identification of the material weakness described in management’s assessment.

4320.7 The auditor should determine the effect an adverse opinion on ICFR has on the auditor’s opinion on the financial statements. Also, the auditor should disclose whether or not the opinion concluding ICFR was ineffective affected its audit opinion on the financial statements. [AS 2201, paragraph 92]

4320.8 A material weakness is a deficiency, or combination of deficiencies, in ICFR such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. [S-X 1-02(a)(4); AS 2201, paragraph A7]

4320.9 A deficiency or combination of deficiencies is an indicator of a material weakness if the auditor determines that the deficiency or combination of deficiencies might prevent prudent officials in the conduct of their own affairs from concluding that they have reasonable assurance that transactions are recorded as necessary to permit the preparation of the financial statements in conformity with GAAP. [AS 2201, paragraph 70]

4320.10 AS 2201 lists four indicators of a material weakness in ICFR, which are:

Identification of fraud, whether or not material, on the part of senior management;
Restatement of previously issued financial statements to reflect the correction of a material misstatement;
Identification by the auditor of a material misstatement of financial statements in the current period in circumstances that indicate that the misstatement would not have been detected by the company’s internal control over financial reporting; and
Ineffective oversight of the company’s external financial reporting and internal control over financial reporting by the company’s audit committee. [AS 2201, paragraph 69]

4320.11 If the material weakness was not included in management’s assessment, the auditor’s report on ICFR should be modified to state that a material weakness has been identified but not included in management’s assessment. Also, the auditor’s report should include a description of the material weakness, which should provide the users of the audit report with specific information about the nature of the material weakness and its actual and potential effect on the presentation of the company’s financial statements issued during the existence of the weakness. If the material weakness was included in management’s assessment but the auditor concludes that management’s disclosure of the material weakness is not fairly presented in all material respects, the auditor’s report should describe this conclusion as well as the information necessary to fairly describe the material weakness. [AS 2201, paragraph 91]

4320.12 Any report modification due to a scope limitation would result in a disclaimer of opinion on the audit of ICFR (except under the limited circumstances described in 4310.11). Reports that result in a disclaimer of opinion are expected to be rare. [S-X 2-02(f)] Reports on audits of ICFR that disclaim an opinion due to a scope limitation should be discussed with CF-OCA in advance of filing. (Last updated: 9/30/2011)

4320.13 When disclaiming an opinion due to a scope limitation, the auditor must state that the scope of the audit was not sufficient to warrant the expression of an opinion. Also, the auditor’s report on ICFR should provide the substantive reasons for the disclaimer in a separate paragraph. [AS 2201, paragraph C4]

4320.14 When the auditor plans to disclaim an opinion on the audit of ICFR due to a scope limitation and the limited procedures performed by the auditor cause the auditor to conclude that a material weakness existed, the auditor’s report on ICFR should include the definition of a material weakness and a description of any material weakness identified, as described in 4320.6. [AS 2201, paragraph C5]

4320.15 If management discloses additional information in the report (e.g., its plans to implement new controls, corrective actions taken after the date of assessment, or a statement that management believes the cost of correcting a material weakness would exceed the benefits to be derived from implementing new controls), the auditor is required to modify its report regarding any additional information and disclaim an opinion on this information. [AS 2201, paragraphs C1 and C12-14]

4320.16 The auditor should inquire about and examine relevant documents for events which occurred subsequent to the date as of which ICFR is being audited but before the date of the auditor’s report. Such subsequent events could include changes in internal controls or other factors. If the auditor obtains knowledge about subsequent events that materially and adversely affect the effectiveness of the company’s ICFR as of the date specified in the assessment, the auditor should issue an adverse opinion on ICFR. If the auditor is unable to determine the effect of the subsequent event on the effectiveness of ICFR, the auditor should disclaim an opinion. [AS 2201, paragraphs 93-96]

4320.17 The auditor may obtain knowledge about subsequent events with respect to conditions that did not exist at the date specified in the assessment but arose subsequent to that date and before issuance of the auditor’s report. If a subsequent event of this type has a material effect on the company’s ICFR, the auditor should include an explanatory paragraph in its report on ICFR describing the event and its effects or directing the reader to the event and its effects as disclosed in management’s report on ICFR. [AS 2201, paragraph 97]

4320.18 An audit report on ICFR may be based, in part, on the work of another auditor when another auditor has audited the financial statements and ICFR of a subsidiary, division, branch or component of a company. The lead auditor should determine whether or not it will make reference in its report on ICFR to the audit of ICFR performed by another auditor. The auditor’s decision to make reference or not is based on factors analogous to those in AU 1206 when a lead auditor divides responsibility with a referred-to auditor when reporting on a company’s financial statements. As a result, the decision to divide responsibility for the audit of ICFR may differ from the decision to divide responsibility with another auditor in the lead auditor’s report on the financial statements. If the auditor makes reference to the report of the referred-to auditor in its report on ICFR, the lead auditor’s report on ICFR should refer to the report of the referred-to auditor when describing the scope of the audit and expressing an opinion on ICFR. [AS 2201, paragraphs C8-C11] (Last updated: 8/22/2025)

4320.19 If the auditor makes reference to another auditor’s report on ICFR, the separate report of the referred-to auditor on ICFR must also be included in the filing. [S-X 2-05]

4320.20 AS 6115 establishes requirements and provides guidance that apply when an auditor is engaged to report on whether a previously reported material weakness in internal control over financial reporting continues to exist as of a date specified by management.

4320.21 The auditor’s objective in an engagement to report on whether a previously reported material weakness continues to exist is to obtain reasonable assurance about whether the previously reported material weakness exists as of a date specified by management and to express an opinion thereon. The auditor’s opinion relates to the existence of a specifically identified material weakness as of a specified date and does not relate to the effectiveness of the company’s ICFR overall.

4400 Review and Compilation Reports

Section	Description	Last Updated
4410	ReviewReports on Interim or Pro Forma Data [AS 4105, AT Section 401]	6/30/2009
4420	Disclosureof Material Quarterly Changes [AS 4105]	8/22/2025
4430	CompilationReports	6/30/2009

> 4410 Review Reports on Interim or Pro Forma Data [AS 4105, AT Section 401]

4410.1 Prior to filing, interim financial statements included in quarterly or transition reports on Form 10-Q must be reviewed by an independent registered public accountant using PCAOB standards and procedures for conducting such reviews, as may be modified or supplemented by the SEC. If the company states in any filing, including registration and proxy statements, that interim financial statements have been reviewed by an independent public accountant, a report of the accountant on the review must be filed with the interim financial statements. [S-X 10-01(d)] Otherwise, the report is not required to be included in the filing.

4410.2 If a Form 10-Q that contains a review report on pro forma data or interim financial statements is incorporated by reference into a registration statement, the auditor must acknowledge use of its review report in a letter filed as Exhibit 15 to the registration statement. [S-K 601]

4410.3 If the review was not performed by an independent registered public accounting firm, the Form 10-Q is considered materially deficient and not timely filed. In addition, the Form 10-Q must include the following disclosures:

Identify the report as deficient;
Label the columns of the financial statements as “not reviewed”; and
Describe how the registrant will remedy the deficiency.

When the review is completed by an independent registered accounting firm, the registrant must file an amendment to remove the references to the deficiency and the financial statements as “not reviewed.”

> 4420 Disclosure of Material Quarterly Changes [AS 4105]

4420.1 Item 302(a) of S-K requires disclosure of summarized quarterly information related to the statements of comprehensive income and earnings per share when there are one or more retrospective changes to the statements of comprehensive income for any of the quarters within the two most recent fiscal years or any subsequent interim period for which financial statements are included or required to be included by Article 3 of S-X that individually or in the aggregate are material. This requirement does not apply to foreign private issuers, mutual life insurance companies, or smaller reporting companies. If it is required to be presented, it must be reviewed by the independent registered accountant.

4420.2 If a registrant voluntarily provides fourth quarter disclosure or disclosure of selected quarterly financial information, the information is subject to the AS 2710 requirements for auditors to read and consider the information for material inconsistencies with the audited financial statements.

4420.3 No reference in the audit report to the quarterly data accompanying the annual financial statements is necessary if the auditor’s review conformed with applicable standards and the auditor is not aware that the interim information is materially affected by a departure from GAAP. Otherwise, the auditor must discuss the departures that exist.

> 4430 Compilation Reports

Compilation reports are not appropriate in any filings, including Regulation A filings, because the association of the accountant provides no basis for reliance. In addition, the presence of a compilation report, if prepared by auditor of the issuer, may indicate a violation of SEC independence standards under S-X 2-01(c)(4)(i)(B).

4500 Change in Accountants [S-K 304, ITEM 4.01 FORM 8-K]

Section	Description	Last Updated
4510	Change in Accountants	6/30/2009
5420	Unusual Issues Involving Changes in Accountants	6/30/2009 unless otherwise noted
4530	Additional Guidance	8/22/2025

> 4510 Change in Accountants

4510.1 If a change in accountant for a registrant or a significant subsidiary on whose report the lead accountant relied occurred within 24 months prior to or in any period subsequent to the date of the most recent financial statements, the registrant should provide the required information in:

An Item 4.01 Form 8-K within 4 business days of the change;
Proxy statements, even though previously disclosed in Form 8-K, if required by Item 9 of Schedule 14A; and
Forms 10-K and 20-F, and registration statements, unless the change was previously disclosed.

NOTE: The disclosures about disagreements required by S-K 304(b) must always be provided, where required, even if previously disclosed. [Instruction 1 to S-K 304; Instruction 2 to Item 16F of Form 20-F]

4510.2 Disclosure of the following items should be provided:

Whether the accountant resigned, declined to stand for reelection or was discharged (one of these must be specifically stated in the filing);
The date of resignation or discharge;
Whether the decision was recommended or approved by the Board of Directors or a committee thereof;
Whether the accountant had issued a report in the last two fiscal years containing a disclaimer or adverse opinion, or that was qualified or modified. A modified opinion includes an opinion that expresses substantial doubt about a company’s ability to continue as a going concern;
Whether in connection with audits of the two most recent years through the date of resignation or discharge there were any disagreements with the former accountant on any matter which, if not resolved to the satisfaction of the accountant, would have caused the accountant to make reference in its report to the matter. Among other items specified in S-K 304(a)(1)(iv), the filing should describe the subject matter of any such disagreement. Disagreements required to be reported include both those resolved to the satisfaction of the accountant and those not resolved to the satisfaction of the accountant.
If there were any reportable events described under S-K 304(a)(1)(v) during the two most recent years and any interim period preceding the former accountant’s resignation or discharge, provide the disclosures required by S-K 304(a)(1)(iv). If the event led to a disagreement, then it should be reported as described under Section 4510.2(e) and need not be repeated.

4510.3 If the registrant amends the Item 4.01 Form 8-K disclosures for any reason, it must also file an updated letter from the auditor addressing the revised disclosures as Exhibit 16.

> 4520 Unusual Issues Involving Changes in Accountants

4520.1 [Reserved]

4520.2 Predecessor Auditor Refuses to Furnish Exhibit 16 Letter

If the predecessor auditor refuses to furnish an Exhibit 16 letter stating whether it agrees with the registrant’s statements, the registrant should indicate that fact in the Item 4.01 Form 8-K or by amendment to the original Form 8-K. See the Division of Corporation Finance’s C&DIs for Exchange Act Form 8-K, Question 214.01.

4520.3 Reverse Acquisition

Unless the same accountant reported on the most recent financial statements of both the registrant and the accounting acquirer, a reverse acquisition always results in a change in accountants. An Item 4.01 Form 8-K should be filed within four business days of the change in accountants, which often occurs on the date the reverse merger is consummated. The accountant that will no longer be associated with the registrant’s financial statements is the predecessor accountant. If a decision has not been made as to which accountant will continue as the successor auditor as of the date of filing the Item 2.01 Form 8-K, an Item 4.01 Form 8-K must be filed within four business days of the date the decision is made.
The disclosures required by S-K 304 with respect to any changes in the accounting acquirer’s auditor which occurred within 24 months prior to, or in any period subsequent to, the date of the acquirer’s financial statements must be provided in the filing. See Section 12230.

4520.4 Form 11-K Plans

Staff practice is not to object if a change in accountants for an employee stock purchase plan or similar plan filing a Form 11-K does not result in the filing of an Item 4.01 Form 8-K.

4520.5 Change in Audit Firm Name

An Item 4.01 Form 8-K is not required to be filed when there is a change in the audit firm name, but the name change should be clearly explained in the registrant’s filings. For example, in a consent or a new or reissued audit report after the firm name change, it is recommended to include “(formerly XXX)” after the current firm’s name/signature to make the change clear to investors.

In evaluating whether the change is solely a change in the name of the firm, the information included in the Item 4.01 8-K C&DIs (Q’s: 114.02 and 114.03 - SEC.gov | Exchange Act Form 8-K) about whether the legal entity had changed should be considered. Generally, a name change of the audit firm does not result in a change of the legal entity as a new legal entity isn’t formed. However, when the name change involves a legal entity change and possibly a new PCAOB registration then an Item 4.01 Form 8-K is likely to be required. All facts and circumstances must be considered to determine whether an Item 4.01 8-K is required. (Last updated: 8/22/2025)

> 4530 Additional Guidance

4530.1 Guidance regarding changes in accountants can be found in the Division of Corporation Finance’s Compliance and Disclosure Interpretations. Questions are grouped into the following categories and sections:

Regulation S-K, Sections 111 and 211 — Item 304 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
- Subsequent interim period
- No reportable events
- Remediation of internal control deficiencies
- Material weakness or significant deficiency in ICFR
- Explanatory paragraph in report on ICFR
- Revocation of accountant’s PCAOB registration
- Time period preceding resignation, declination or dismissal
Exchange Act Form 8-K, Section 114 and 214 -Item 4.01 Changes in Registrant’s Certifying Accountant
- Revocation of accountant’s PCAOB registration
- New lead accountant related to former lead accountant
- Business combination between lead accountant and another accounting firm
- Former accountant declines to provide agreement letter
- Requirement to use Form 8-K
Exchange Act Forms, Section 110 – Form 20-F
- Disclosure about a “previously reported” change in accountant

4600 Non-Reliance on Previously Issued Financial Statements or Related Audit Report or Completed Interim Review [Item 4.02 Form 8-K]

Section	Description	Last Updated
4610	Non-Reliance on Previously Issued Financial Statements [Item 4.02(a) Form 8-K]	6/30/2009
4620	Non-Reliance on Previously Issued Audit Report or Completed Interim Review [Item 4.02(b) Form 8-K]	6/30/2009
4630	Other – Prior Disclosures Regarding Disclosure Controls and Procedures	6/30/2009
4640	Other – Pro Forma Financial Information and XBRL	8/22/2025

> 4610 Non-Reliance on Previously Issued Financial Statements [Item 4.02(a) Form 8-K]

4610.1 An Item 4.02(a) Form 8-K must be filed when a registrant’s board of directors, committee of the board, or board authorized officer(s) concludes any previously issued financial statements should no longer be relied upon due to an accounting error.

4610.2 [Reserved]

4610.3 The staff believes that filing an Item 4.02(a) Form 8-K without also filing an Item 4.02(b) Form 8-K would be acceptable unless the auditor’s conclusion that the financial statements can no longer be relied on relates to a different error or matter from that which triggered the registrant’s filing under Item 4.02(a) Form 8-K. See the Division of Corporation Finance’s C&DIs for Exchange Act Form 8-K, Question 115.01.

4610.4 The Form 8-K must disclose:

The date that the registrant concluded the financial statements should no longer be relied upon and identify the financial statements and years or periods covered that should no longer be relied upon;
A description of the facts underlying the conclusion to the extent known to the registrant at the time of filing; and
Whether the audit committee, or the board of directors in the absence of an audit committee, or authorized officer(s), discussed the disclosed matters with the registrant’s independent accountant.

> 4620 Non-Reliance on Previously Issued Audit Report or Completed Interim Review [Item 4.02(b) Form 8-K]

4620.1 An Item 4.02(b) Form 8-K must be filed if the registrant’s current or former independent accountant advises or notifies it must disclose or take action to prevent future reliance on a previously issued audit report or completed interim review related to previously issued financial statements.

4620.2 The filing of an Item 4.02(b) Form 8-K may, but does not necessarily, result in non-reliance on previously issued financial statements, and require the filing of an Item 4.02(a) Form 8-K. It would depend upon the underlying reasons that the accountant advised a registrant that its audit report or completed interim review should no longer be relied on.

4620.3 [Reserved]

4620.4 The Form 8-K must disclose:

The date on which the accountant advised or notified the registrant;
The specific financial statements that should no longer be relied upon;
A brief description of the information provided by the accountant; and
A statement of whether the audit committee, or the board of directors in the absence of an audit committee, or authorized officer or officers, discussed the matters disclosed in the filing under Item 4.02(b) of Form 8-K with the accountant.

4620.5 The Form 8-K must include any written notice received from the accountant as Exhibit 7.

4620.6 A registrant must provide the accountant with a copy of the disclosures the registrant is making in response to the Item 4.02(b) Form 8-K no later than the day that the disclosures are filed with the SEC.

4620.7 A registrant must request the accountant furnish the registrant as promptly as possible a letter addressed to the SEC stating whether the independent accountant agrees with the statements made by the registrant in response to the Item 4.02(b) Form 8-K and, if not, stating with what it does not agree. If the letter is not available on the date the 8-K is filed, a company must amend its previously filed Form 8-K to file the independent accountant’s letter as Exhibit 7 no later than two business days after the registrant’s receipt of the letter.

> 4630 Other — Prior Disclosures Regarding Disclosure Controls and Procedures

A registrant should consider whether the disclosures provided under S-K 307 in prior filings need to be modified, supplemented or corrected in order to explain whether management’s previously discussed conclusions regarding the effectiveness of DCP continue to be appropriate in light of the restated financial statements or non-reliance on a previously issued audit report or completed interim review. [Release No. 33-8810]

4640 Other – Pro Forma Financial Information and XBRL

4640.1 There is no requirement to file an Item 4.02 Form 8-K if a company concludes there is an error in pro forma financial information. However, an amendment to the form containing such information may be required to correct the error. See the Division of Corporation Finance’s C&DIs for Exchange Act Form 8-K, Question 115.02.

4640.2 There is no requirement to provide disclosure under Item 4.02(a) of Form 8-K when a material error is discovered in the Interactive Data File while the financial statements upon which they are based do not contain an error and may continue to be relied on. A filer may voluntarily provide non-reliance disclosure similar to Item 4.02(a) that pertains only to the interactive data under either Item 7.01 or 8.01 of Form 8-K. See the Division of Corporation Finance’s C&DIs for Exchange Act Form 8-K, Question 115.03.

4700 “To Be Issued” Accountant's Reports

Section	Description	Last Updated
4710	Contingent Upon Future Event or Transaction	8/22/2025
4720	Contingent upon Future Underwriting Agreement	6/30/2010

> 4710 Contingent Upon Future Event or Transaction

If audited financial statements are required in a filing, the audit report should be signed and unrestricted. Generally, the staff will not make a review determination on or commence a review of a filing that does not meet that requirement. In some circumstances, however, a transaction that will occur at or immediately before the effectiveness of a registration statement is retrospectively reflected in the annual financial statements. If the transaction prevents the auditor from expressing an opinion on the financial statements at the time of filing, the staff has accepted the filing of a “draft report” in the form that it will be expressed at effectiveness. Such transactions may include, but are not limited to:

stock splits; and
reorganizations in which the entities comprising an IPO registrant will not be legally transferred to the registrant until immediately before effectiveness.

Another transaction where the staff has accepted the filing of a “draft report” in the form that it will be expressed at effectiveness is if there is a component that qualifies as a discontinued operation before an initial registration statement is filed but after the date of the latest balance sheet included in the initial filing. A “to-be-issued” report in this circumstance may be included when:

The disposal of the discontinued operation has occurred;
The audit of the financial statements, including the retrospective revision, is complete; and
The registrant has consulted with CF in advance to confirm that the use of the “to-be-issued” audit report is appropriate.

Similarly, the staff has also accepted a “draft report” when there has been a change in reportable segments and the circumstances were consistent with the factors presented directly above for discontinued operations.

In these cases, the draft report should be accompanied by a signed preface of the auditor stating that it expects to be in a position to issue the report in the form presented at effectiveness. No registration statement can be declared effective until the preface is removed and the accountant’s report finalized.

> 4720 Contingent Upon Future Underwriting Agreement

An auditor may conclude that it is appropriate to include an explanatory paragraph about the registrant’s ability to continue as a going concern in the auditor’s report. The auditor may believe that upon the receipt of the proceeds from the offering that the explanatory paragraph could be removed. As the receipt of the proceeds occurs upon closing — not at effectiveness — the auditor’s report should include the explanatory paragraph that the auditor believed was appropriate at the time of effectiveness. It would not be appropriate for the report to indicate that the explanatory paragraph would be removed at closing as that event takes place after effectiveness.

4800 Other Matters

Section	Description	Last Updated
4810	Consents to the Use of Audit Reports	6/30/2009 unless otherwise noted
4820	Accountant’s Inability to Reissue Reports [AI 23, Interpretation 15; Regulation C, Rule 437]	6/30/2009
4830	Successor Auditor Reports [AI 23]	6/30/2009 unless otherwise noted
4840	Accountant’s Refusal to Reissue Reports	6/30/2009
4850	Illegal Acts	10/30/2020
4860	Signatures	6/30/2009
4870	[Reserved]	8/22/2025

> 4810 Consents to the Use of Audit Reports

4810.1 Registrants must file a copy of the auditor’s consent to the use of its audit report or an acknowledgement letter regarding the use of its review report in any filing under the 1933 Act as an exhibit. The primary purpose of obtaining a consent or acknowledgement letter is to assure that the auditor is aware of the use of its report and the context in which it is used.

4810.2 The consent or acknowledgement letter must indicate the date and a conformed EDGAR signature. A manually or electronically signed consent or acknowledgement letter must be kept on file by the registrant.

4810.3 A new consent or acknowledgement letter is required:

Whenever any change, other than typographical, is made to the financial statements;
For an amendment if there have been intervening events since the prior filing that are material to the company; and
Prior to the effectiveness of a registration statement if an extended period of time passes since the last filing. An extended time is generally any period which is more than 30 days.

A consent is not required to accompany the confidential submission of a draft registration statement. [JOBS Act FAQ #52]. However, a consent is required once the registration statement is publicly filed. (Last updated: 8/22/2025) )

4810.4 1934 Act Reports

Filing of a consent to the use of an audit report (or acknowledgment letter) is not required in 1934 Act reports, other than an annual report on Form 40-F, unless the 1934 Act report is automatically incorporated by reference into a previously filed 1933 Act filing, such as a Form S-3 or Form S-8. In addition, a consent is required in a registration statement on Form 20-F [Item 10.G of 20-F] and in registration statements and annual reports on Form 40-F.
Periodic reports on Forms 10-K and 20-F, 1934 Act registration statements on Form 10 or Form 20-F, and definitive proxy statements that include financial statements must include a signed audit report. The signature must be a conformed EDGAR signature. [S-T 302] The original manually or electronically signed report must be kept on file by the registrant.
Definitive proxy statements that include financial statements must have a manually signed audit report.
A reissuance of the auditor’s report is required when a previously filed 1934 Act filing is amended to include restated financial statements or retrospectively adjusted financial statements.
A registrant need not file an updated consent on the annual financial statements when the registrant forward incorporates a Form 10-Q into a pre-effective Form S-3. However, the auditor’s Section 11 liability applies as to the auditor’s expertised information included in the registration statement as of the effective date regardless of the inclusion of an updated consent. (Last updated: 8/22/2025)

4810.5 Waivers [Regulation C, Rule 437]

In rare circumstances, such as situations involving hostile takeover attempts, a consent may be waived if the registrant submits a request to CF-OCA for a waiver and provides an affidavit complying with Rule 437 of Regulation C.
Hostile takeovers
1. A registrant offering its own securities in a hostile exchange offer for a target’s stock may seek and not be able to obtain the target’s cooperation in providing either its audited financial statements or the target auditor’s consent to the use of its report in the required registration statement. The acquirer/registrant should use its best efforts to obtain the target’s permission and cooperation for the filing or incorporation by reference of the target’s financial statements and the target auditor’s consent to the inclusion of its report on the financial statements. At a minimum, a registrant is expected to write to the target requesting these items and to allow a reasonable amount of time for a response prior to effectiveness of the filing.
2. If a registrant uses its best efforts but is unsuccessful in obtaining the target’s permission and cooperation for the filing or incorporation by reference of its financial statements and its auditor’s consent to the inclusion of its report on the financial statements, the registrant may request a waiver of the consent. The affidavit included in the request should document the specific actions taken by the registrant to obtain the cooperation of the other party for the filing as well as the efforts to obtain the auditor’s consent. Correspondence evidencing the registrant’s request for these items should accompany the affidavit.
3. Depending on the facts and circumstances, the staff may agree to waive the requirement to include or incorporate by reference the target auditor’s audit report in the event the target is unwilling to cooperate. In that situation, disclosure should be made that, although an audit report was issued on the target’s financial statements and is included in the target’s filings, the auditor has not permitted use of its report in the registrant’s registration statement. The auditor should not be named. Any legal or practical implication for shareholders of the registrant and the target resulting from the inability to obtain the cooperation of the target or consent of the target’s auditor should be explained. No disclosure in the registration statement should expressly or implicitly disclaim the registrant’s liability for the target’s financial statements. In the event that circumstances change, the registration statement should be amended to include the audited financial statements and the auditor’s consent required by the form.

4810.6 The consent of the independent accountant is not required for a report on financial statements which is not a part of a 1933 Act registration statement under Rule 412(c) of Regulation C, like superseded financial statements.

> 4820 Accountant’s Inability to Reissue Reports [AI 23, Interpretation 15; Regulation C, Rule 437]

4820.1 When an accounting firm ceases operations, it may be unable to reissue a prior report or give consent to the use of a prior report. A company should submit a consent waiver request under Regulation C, Rule 437 with CF-OCA if the auditor does not reissue or give consent to the use of its prior report. The guidance in Section 4810.5 regarding consent waiver requests should be followed. If the firm still exists, although it is not practicing public accounting, and has the ability to reissue or give consent to the use of its prior report, a waiver is unlikely to be granted.

NOTE: The footnote to Interpretation 15 of AI 23 states a firm is considered to have ceased operations when it no longer issues audit opinions either in its own name or in the name of a successor firm. A firm may cease operations with respect to public entities and still issue audit opinions with respect to non-public entities.

4820.2 If the waiver request is granted, certain disclosures should be made in any filings or reports that include the ceased firm’s audit report. The predecessor auditor’s latest signed and dated report on the financial statements should be reprinted with a legend indicating that the report is a copy of the previously issued report and that the ceased firm has not reissued the report. [AI 23.65]

> 4830 Successor Auditor Reports [AI 23]

4830.1 If the prior period financial statements audited by the predecessor auditor are unchanged, the successor auditor should indicate in the introductory paragraph of his or her report that the financial statements of the prior period were audited by another auditor, the date of the predecessor auditor’s report, the type of report issued by the predecessor auditor, and if the report was other than a standard report, the substantive reasons for it. The successor auditor ordinarily should indicate in its report that the other auditor has ceased operations. The successor auditor should not name the predecessor auditor in the report. Note that a reference to the predecessor’s audit report should be included even if the predecessor auditor’s report on the prior period financial statements is reprinted and accompanies the successor auditor’s report because reprinting does not constitute reissuance of the predecessor auditor’s report. [AI 23.61] (Last updated: 8/22/2025)

4830.2 If the financial statements audited by the ceased firm are restated, the successor auditor will need to either reaudit the financial statements, or in certain cases, audit only the restatement adjustments. The successor’s auditor’s report should state that the predecessor auditor reported on the prior financial statements before restatement. [AI 23.66]

4830.3 A full reaudit generally is necessary when the restatement adjustments include, but are not limited to:

Corrections of an error;
Reflection of a change in reporting entity;
Retrospective application of change in accounting principle:
1. with significant impact on previously reported amounts, or
2. that affect previously reported net income or net assets;
Reporting discontinued operations; and
Changes affecting previously reported net income or net assets. [AI 23.70]

4830.4 If the successor auditor is engaged to audit only the restatement adjustments to the prior period financial statements that were audited by a predecessor auditor who has not ceased operations, the successor auditor must be able to form an opinion that the adjustments are appropriate and have been properly applied. In determining whether he or she can form such an opinion, the successor auditor should consider the extent of the adjustments, the reason for the adjustments, and the cooperation of the predecessor auditor. [PCAOB Staff Questions and Answers, “Adjustments to Prior-Period Financial Statements Audited by a Predecessor Auditor”, Question 4 -Microsoft Word - Staff QA Adjustments to FS Audited by Predecessor Auditor … ]

4830.5 If the successor auditor is able to satisfy him or herself as to the appropriateness of the restatement adjustments, he or she may report on the restatement adjustments pursuant to the guidance in AS 3105.58. [AI 23.71]

4830.6 A successor auditor may audit the restatement adjustments in prior period financial statements audited by a predecessor auditor that has not ceased operations, so long as the auditor is independent and registered with the PCAOB. See PCAOB Staff Questions and Answers, “Adjustments to Prior-Period Financial Statements Audited by a Predecessor Auditor”, Question 5 for example modifications to the audit report in such scenarios at: Microsoft Word - Staff QA Adjustments to FS Audited by Predecessor Auditor … . (Last updated: 8/22/2025)

4830.7 An auditor that is subsequently determined to be no longer independent of its client may reissue previously issued reports and consents to the use of those previously issued reports, as long as it was independent at the time of original issuance of the report. An auditor may perform the normal subsequent events procedures required by AS 3105 prior to reissuing a report. Situations in which other audit work would be necessary to reissue the report should be discussed with OCA prior to filing.

> 4840 Accountant’s Refusal to Reissue Reports

4840.1 The staff is not in a position to evaluate the reasons for an accountant’s refusal to reissue its report and will not intervene in disputes between registrants and their auditors. Moreover, the staff will not waive the requirements for the audit report, the accountant’s consent to the use of its audit report, or the naming of the accountant as an expert in filings. If a registrant is unable to reuse the previously issued audit report in a current filing, the registrant must engage another accountant to reaudit those financial statements.

> 4850 Illegal Acts

Section 10A of the 1934 Act requires that auditors report in a timely manner certain uncorrected illegal acts to a registrant's board of directors. It further requires the registrant, or the auditor if the registrant fails to do so, to provide information regarding the illegal act to OCA. For additional information, see Notices required under Section 10A-1 of Exchange Act.

> 4860 Signatures

Wherever a signature is required, typed signatures or duplicated or facsimile versions of the manually signed document may be used. In any of these cases, each signatory must manually or electronically sign the document authenticating, acknowledging or otherwise adopting the signature that appears in the filing before or at the time that the filing is made, and such document must be retained by the filer for five years. A copy of this document must be furnished to the SEC upon request. [S-T 302] In certain instances, an auditor may reissue its audit report. If the reissued report is included in a filing, it must be manually or electronically signed as described above.

> 4870 [Reserved]

Footnotes

This table describes the staff’s application of PCAOB registration requirements for an auditor whose report is included in a filing with the SEC. The table reflects instances where a lead auditor divides responsibility with one or more referred-to auditors. In these instances, the lead auditor’s report must make reference to the audit and auditor’s report of the referred-to auditor and the referred-to auditor’s report is required to be included in the filing pursuant to S-X 2-05. However, there are instances, not included in the table, when a lead auditor will use the work of another auditor and take responsibility for the other auditor’s work. In these instances, the other auditor’s report is not included in the filing with the SEC. The determination of whether the other auditor or referred-to auditor must be registered with the PCAOB is made by reference to the Sarbanes-Oxley Act and the PCAOB’s rules. In all such instances the lead auditor is responsible for performing the audit in accordance with PCAOB standards

The term ‘issuer’ means an issuer (as defined in Section 3 of the 1934 Act), the securities of which are registered under Section 12 of that Act, or that is required to file reports under Section 15(d) of that Act, or that files or has filed a registration statement that has not yet become effective under the 1933 Act, and that it has not withdrawn. See Section 2(a)(7) of the Sarbanes Oxley Act and PCAOB Rule 1001.

The auditor of the financial statements of the non-issuer entity must be registered if, in performing the audit, the auditor played a “substantial role” in the audit of the issuer, as that term is defined in PCAOB Rule 1001(p)(ii). If the “substantial role” test is not met, the firm is not required to be registered. The inclusion or exclusion of such a report under S-X 2-05 does not affect this determination.

S-X 2-02 requires that the auditor’s report state the applicable professional standards under which the audit was conducted. Under S-X 1-02 an audit of the financial statements of an issuer means an examination by an independent accountant in accordance with the standards of the PCAOB. In the situation identified in the chart above, the view of the SEC staff is that the applicable professional standards in S-X 2-02, as applied to the other auditor’s report, relates to an issuer and, therefore, the other auditor’s report must refer to the standards of the PCAOB.

A non-issuer entity could also be a bidder in Schedule TO or an acquirer in a proxy statement.

If a lead auditor is making reference to a referred-to auditor’s report on the financial statements of the non-issuer entity, the referred-to auditor’s report must refer to the standards of the PCAOB. See footnote 4 above. If a lead auditor does not make reference to another auditor’s report on the financial statements of the non-issuer entity, the other auditor’s report filed to satisfy S-X 3-09 need not refer to the standards of the PCAOB.

The entity is itself an issuer and so must comply with the rules applicable to issuers.

The financial statements of an issuer in a Tier 1 Regulation A offering are not required to be audited. However, if an audit is obtained for other purposes and that audit was performed in accordance with either U.S. GAAS or the standards of the PCAOB by an auditor that is independent pursuant to either the independence standards of the AICPA or S-X 2-01, the audited financial statements and an audit opinion complying with S-X 2-02 must be filed along with such financial statements in a Tier 1 Regulation A offering. In this case, the auditor may, but need not, be registered with the PCAOB.