April 6, 2006

Pop Quiz: Take Care When Preparing Those New Automatic Shelfs!

In scanning some of the new Form S-3ARs (ie. automatically effective shelf registration statements), I was reminded how confusing it can be to remember which new undertakings are required for which forms.

So here’s a pop quiz to test yourself: can you spot the oddity on the facing page of this S-3ASR filed recently? The answer is at the end of today’s blog (so don’t read all the way down if you want to take the quiz first).

By the way, there is no gloating here. This is all so new and I’m sure many of us are leaving a cookie-trail of glitches (or at least glitchettes). Reminds me to remind you to always take any answers in our Q&A Forum with a grain of salt (and bear our disclaimer in mind).

What About Not Requiring Auditor Independence?

In this article, a financial reporter proposes doing away with one of the most sacred tenets of auditor regulation: auditor independence. The author proposes letting auditors do any – and all – work for clients they want, as long as it’s fully disclosed, and then letting the market decide whether to trust the numbers. I personally don’t like this concept – but leave it out there as “food for thought.”

Or How About Principles-Based Regulation of Auditor Independence?

According to this recent survey from the European Federation of Accountants, over three-quarters of the EU Member countries have now adopted an EU Recommendation that principles-based regulation be applied for auditor independence issues. I am told that this is a tightening of the standard for Europe.

Pop Quiz Answer

For the pop quiz at the top of today’s blog, the oddity is the delaying amendment at the bottom of the facing page. This is not applicable for a Form S-3ASR. In fact, Rule 473(d) states that you aren’t allowed to file a delaying amendment with something that goes effective automatically.