As expected, the Securities and Exchange Commission this week postponed for a year the final phase-in period for rules that would shorten the amount of time that larger companies, known as "accelerated filers," have to file their quarterly and annual reports.
Under the amended rules, the deadline for accelerated filers will stay for an additional year at 75 days after year's end for annual reports and 40 days after quarter's end for quarterly reports. For reports filed for fiscal years ending on or after Dec. 15, 2005, accelerated filers will have to file annual reports within 60 days of the end of the year and quarterly reports within 35 days after the end of the quarter.
The commission said that it delayed the rule primarily to give accelerated filers and their auditors extra time to focus on complying with Sarbanes-Oxley Section 404 requirements regarding internal control over financial reporting. Accelerated filers have to begin to include both a management report and an auditor report on the effectiveness of its internal control over financial reporting in its annual report filed for its first fiscal year ending on or after Nov. 15, 2004.
"Accelerated filers" are defined as companies that have a public float of at least $75 million; have been subject to the SEC's periodic reporting requirements for at least 12 months and have filed one annual report; and aren't eligible to use the SEC's small business reporting forms.
The SEC had proposed the postponement this summer, after companies and auditors requested the delay. The SEC had amended its rules to accelerate the filing of quarterly and annual reports in September 2002 to get information to investors faster, and had planned to phase in the accelerated filing deadlines over a three-year period. During the first year, accelerated filers became subject to new disclosure requirements concerning Web site access to their reports. Then, the deadline for annual reports filed for fiscal years ending on or after Dec. 15, 2003, was accelerated to 75 days from 90 days, and the deadline for the three subsequently filed quarterly reports was accelerated to 40 days from 45 days.
The SEC said that it received 41 comment letters on the proposal from companies, accounting firms, individual accountants, business associations and law firms, with an overwhelming majority supporting the postponement. The SEC said that commenters rejected one proposed alternative to the delay that would've extended the filing deadlines only for filers requesting an extension by filing Form 12b-25, on grounds that companies would have to incur additional time and cost to file the form and that public filing of the form could raise unnecessary concerns about the registrant in the capital markets.
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