SEC Chairman Jay Clayton told a Nashville, Tenn., entrepreneurship conference on August 29, 2018, that the Commission has heard from market participants and members of the former Advisory Committee for Small and Emerging Companies that, particularly for smaller companies, the costs associated with this requirement can divert significant capital from the core business needs of companies without meaningful benefit.
Currently, companies with a public float of less than $75 million or no public float have relief from the Section 404(b) auditor attestation requirements. Clayton explained that the provision is often misunderstood. Those companies are still required to establish, maintain, and assess the effectiveness of ICFR, and, even if not engaged to report on ICFR, independent auditors are still responsible for considering ICFR in the performance of their financial-statement-only audits. Clayton seemed to suggest that a similar exemption could be made for the more than 1,200 exchange-listed companies with a market cap of less than $250 million.