Delay in Phase-in of Accelerated Filing Deadlines

News Brief

By: Cydney Posner

As anticipated, the SEC is proposing to delay for one year the final phase of the acceleration of filing dates for periodic reports.

Under the current acceleration rules, accelerated filers would be required, in phase three, to file within 60 days after FYE their annual reports on Form 10-K for fiscal years ending on or after December 15, 2004, and to file within 35 days the three subsequent quarterly reports.

The SEC is proposing to postpone for one year the completion of the final phase-in of the accelerated filing

deadlines to allow additional time to focus on compliance with SOX 404 and the new requirements regarding internal control over financial reporting. An accelerated filer must begin to comply with the requirements relating to internal control over financial reporting in its annual report filed for its first fiscal year ending on or after November 15, 2004. As a result, under current rules, most accelerated filers would have to comply for the first time with the internal control reporting requirements at the same time as the annual report deadlines were significantly compressed. The SEC believes "very strongly that it is critical that all public companies implement the internal control requirements mandated by Section 404 of the Sarbanes-Oxley Act of 2002 completely and carefully;" and that "these requirements are central to the Act’s objectives of improving the accuracy and reliability of financial reporting."

As a result, the SEC is proposing to postpone the accelerated filing phase-in period by one year so that the deadline for annual reports for fiscal years ending on or after December 15, 2004 would remain at 75 days after FYE and the quarterly report deadline for the three subsequently filed quarterly reports would remain at 40 days after quarter end. For a company that meets the definition of an accelerated filer as of the end of its fiscal year ending on or after December 15, 2004, the annual report deadline would be 75 days after FYE. Under the proposed amendments, the phase-in period would resume in year four, when the deadlines would change to 60 days for 10-Ks for fiscal years ending on or after December 15, 2005 and 35 days for the subsequent three quarterly reports. The new deadlines would then become permanent.

Conforming amendments would also be made to Reg S-X. Updated interim financial information would continue for an additional year to be required within 130 days after the end of the registrant’s fiscal year for fiscal years ending on or after December 15, 2004 and before December 15, 2005, and then in year four, change to 125 days.

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