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5 July 2007 SEC proposes consolidation of Regulation S-B rules into Reg. S-K

27 June 2007 SEC proposes reducing holding periods under Rule 144

15 Dec. 2006 SEC again extends Section 404 compliance date for non-accelerated filers

Archives: 2005



SEC Division of Corporation Finance:                Annual Report Reminders-Staff Alert

Washington, D.C., March 4, 2005 - This Staff Alert from the SEC Division of Corporation Finance is issued to remind companies of a few points regarding their upcoming annual reports on Forms 10-K and 10-KSB.  The following points are not new interpretations, but rather highlight existing requirements or reiterate previously articulated positions of the Commission or the Staff.  These are not rules, regulations or statements of the SEC and the Commission has neither approved nor disapproved them.  

Disclosure of Previously Unreported Form 8-K Events:

Where a company is required to disclose information in a Form 8-K report during the fourth quarter of a fiscal year, but does not file that Form 8-K,  Item 9B of Form 10-K and Item 8B of Form 10-KSB require disclosure of that information in the annual report for the fiscal year including that fourth quarter.  These items compel the inclusion of this information in the annual report, regardless of whether the annual report form would otherwise require the disclosure.  The August 2004 revisions to Form 8-K require disclosure of a significant number of new items within four business days of the occurrence of a triggering event.  Companies are reminded that any information that was required to be reported on Form 8-K in their fourth quarter, but was not so reported, should now be disclosed in the annual report under Form 10-K, Item 9B or Form 10-KSB, Item 8B.

Correct Version of Certifications Required by Rules 13a-14(a) and 15d-14(a):

In the June 2003 release adopting rules under Section 404 of the Sarbanes-Oxley Act and the related changes to certifications, the Commission stated that the certifications as set forth in Item 601(b)(31) of Regulation S-K, Item 601(b)(31) of Regulation S-B, Forms 20-F and 40-F may omit the following language during the Section 404 transition period, which has now been extended, until the Section 404 rules are effective for the issuer:

The introductory language in paragraph 4 of the certification that refers to the certifying officersí responsibility for establishing and maintaining internal control over financial reporting for the company; and paragraph 4(b) which states that the certifying officers have designed the internal control over financial reporting or caused the internal control over financial reporting to be designed under their supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

Accelerated filers with fiscal years ending on or after November 15, 2004 are now required to include, in their annual reports on Form 10-K, managementís report on the companyís internal control over financial reporting and a registered public accounting firmís audit report on managementís assessment of internal control over financial reporting.  The certifications filed with the Forms 10-K required to include these internal control reports (and any subsequent reports on Forms 10-K or 10-Q) must now include all of the language required in the certifications, including the language described in the bullets above.  

Certifying officers of non-accelerated filers, foreign private issuers and accelerated filers availing themselves of the Order under Section 36 of the Securities Exchange Act of 1934 granting an Exemption from Specified Provisions of Exchange Act Rules 13a-1 and 15d-1 may continue to omit this language from their certifications, in accordance with the transition provisions, until their company is required to file its first internal control reports.

Further, certifying officers of companies should continue to note that the language of the certifications should not be changed from that set forth in Items 601(b)(31) of Regulation S-K, Item 601(b)(31) of Regulation S-B, Form 20-F and Form 40-F, except as noted in the document Division of Corporation Finance: Sarbanes-Oxley Act of 2002 - Frequently Asked Questions (issued November 8, 2002, revised November 14, 2002).  In those Frequently Asked Questions, the staff indicated that, under certain circumstances, certifications filed with amendments to periodic reports may omit language which relates to disclosures not included in the amended periodic report, and that the language referencing ďother certifying officersĒ may be revised to appear in the singular if there is only one certifying officer.

Placement of the Internal Control Reports:

In the June 2003 release, the Commission indicated that, while the final rules did not specify where managementís report on internal control over financial reporting must appear in the companyís annual report, it is important for the report to be in close proximity to the corresponding audit report on managementís assessment of internal control over financial reporting issued by the companyís registered public accounting firm.  Again, the final rules do not mandate placement of managementís report on internal control over financial reporting or the auditorís report on managementís assessment of internal control over financial reporting; however, companies should note that the Commission stated its expectation that companies will choose to place the internal control reports together near their MD&A disclosure or in a portion of the document immediately preceding the financial statements.

Auditor Consents:

The staff is aware of some uncertainty regarding the nature of the auditorís consent in a Form 10-K where the Form 10-K will be incorporated by reference into a Securities Act registration statement and the Form 10-K includes the auditorís report on managementís assessment of internal control over financial reporting.  In this situation, auditors are reminded that the auditorís consent should cover both the auditorís report on the financial statements and the auditorís report on managementís assessment of internal control over financial reporting.  See Question 21 in the document entitled Office of Chief Accountant and Division of Corporation Finance: Managementís Report on Internal Control Over Financial Reporting and Certification of Disclosure in Exchange Act Reports - Frequently Asked Questions (revised October 6, 2004).