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Chapter 3 — SEC Disclosure Topics

3.6 Internal Control Over Financial Reporting

3.6 Internal Control Over Financial Reporting

In addition to disclosing material changes in ICFR on a quarterly basis,18 a registrant must annually provide management’s report on ICFR and, if applicable, the attestation report of the registrant’s registered public accounting firm.19 These reports are not required in registration statements or Form 11-K.20 Further, newly public companies generally do not need to provide management’s report on ICFR in the first Form 10-K that they file after their initial public registration statement is declared effective;21 however, they are required to include a statement regarding the transition period established for them22 if management’s report is not included. In addition, the Jumpstart Our Business Startups (JOBS) Act amended Section 404(b) of the Sarbanes-Oxley Act by exempting EGCs from the requirement to obtain an attestation report on ICFR for as long as such entities retain their EGC status. See Section 3.8 for considerations related to EGCs.

Footnotes

19
The requirement to provide an attestation report applies only to large accelerated and accelerated filers because nonaccelerated filers are exempt from this requirement under Section 404(b) of the Sarbanes-Oxley Act.
20
Form 11-K is used to file the annual reports for employee stock purchase, savings, and similar plans.
21
However, paragraph 4310.6 of the FRM states, in part, “A company that historically reported under the Exchange Act as a voluntary filer or because of registered debt, and therefore filed annual reports up to and through the date of its [equity] IPO, in which it was required to comply with . . . 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.”
22
As required by Instruction 1 to Regulation S-K, Item 308.
23
See the December 9, 2015, speech delivered by Brian Croteau, then deputy chief accountant in the SEC’s Office of the Chief Accountant (OCA), at the 2015 AICPA Conference.
24
An immaterial restatement is a restatement of previously issued financial statements for the correction of a misstatement that is either (1) not material to the prior period being changed but would be material to the current period if corrected in the current period or (2) not material to any periods being presented.
25
See the December 8, 2014, speech delivered by then OCA Senior Associate Chief Accountant Kevin Stout at the 2014 AICPA Conference.
26
This issue was discussed at the Forums on Auditing in the Small Business Environment hosted by the PCAOB in December 2012.
27
See the December 10, 2018, speech delivered by Emily Fitts, then professional accounting fellow in the OCA, at the 2018 AICPA Conference.
28
For additional information, see Deloitte’s June 10, 2013, Heads Up on the revised COSO framework.
29
Instruction 1 to Item 308 notwithstanding, registrants should note that paragraph 4310.6 of the FRM states, in part, “A company that historically reported under the Exchange Act as a voluntary filer or because of registered debt, and therefore filed annual reports up to and through the date of its [equity] IPO, in which it was required to comply with . . . 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.”