September 23, 2005

More Thoughts on the SEC’s Proposed 404 Delay

From a member regarding the SEC’s 404 delay: “I read your entry today and have a small point that makes a big difference for at least one client. When you refer to the extension for non-accelerated filers, you indicate that an issuer who is not an accelerated filer will benefit from the extension. I think the extension will only apply to issuers who are not accelerated filers now and don’t exceed the $75 million public float test at the end of their next second quarter.

I have a client whose public float has been hovering around $75 million for the past year. When the SEC last extended the 404 deadline for nonaccelerated filers, the client had to wait until the end of its second quarter to see whether they qualified for the extension or would have only 6 months to comply with 404. After listening to yesterday’s meeting, it doesn’t seem that the SEC is taking a different approach with this extension – in other words, they won’t grandfather issuers who aren’t accelerated filers at the time the extension was granted. I realize this affects a very small number of issuers and our client intends to publicly comment on the latest extension.”

Read: Just like the last time 404 was delayed, if you become an accelerated filer during the extension period, you get no relief – unless the SEC changes something when it adopts new final rules.

We have posted our own notes from Wednesday’s open Commission meeting as well as a number of law firm memos regarding the meeting. In addition, I answered a query in the Q&A Forum yesterday (#1195) that fleshes out the proposed definition of “accelerated filer.”

Transcript for IPO Webcast Posted!

We have posted the transcript from last week’s webcast: “Drilling Down: Doing an IPO After the ’33 Act Reform.”

AICPA’s 2nd Exposure Draft re: Communication of Internal Control Matters

On September 1st, the AICPA’s Auditing Standards Board issued a 2nd exposure draft on “Communication of Internal Control Related Matters Noted in an Audit,” which is posted in our “Internal Controls” Practice Area.

The exposure draft contains guidance beyond what the PCAOB has provided on control deficiency assessment – and in certain areas, the draft is not consistent with the direction of the SEC and PCAOB from their May 16th statements. Not sure why the ASB is providing guidance on the same topics as PCAOB, especially without indicating it only applies to non-issuers. The comment period for the revised exposure draft ends on October 31, 2005.

How to Frame Arguments in Post-Acquisition Disputes

In this podcast, in light of the fact that more and more accountants are being used to serve as independent arbitrators in post-acquisition disputes, Jeffrey Katz, a director in the BDO Seidman Litigation and Fraud Investigation Practice, provides guidance on how attorneys might pose their arguments based on the accounting principles underlying a transaction, including:

– Why are generally accepted accounting principles (GAAP) so often at the center of post-acquisition disputes?
– What is the key to presenting persuasive evidence to an accounting arbitrator?
– What is the distinction between an arguable position and a position that is compelling to accounting principles?
– How can changes in GAAP be used to plant doubt in the mind of the arbitrator?