CBIZ CPAs recently submitted a comment letter to the Securities and Exchange Commission (SEC) regarding its proposed rule, Enhancement of Emerging Growth Company Accommodations and Simplification of Filer Status for Reporting Companies. The proposal seeks to streamline the public company reporting framework by reducing the number of filer categories and expanding access to scaled disclosure accommodations.
CBIZ CPAs supports the SEC’s goal of reducing complexity and encouraging access to public markets and offers some recommendations to help mitigate against unintentionally diminishing transparency and investor protections.
The SEC proposal would consolidate existing filer classifications into two primary categories: Large Accelerated Filers (LAFs) and Non-Accelerated Filers (NAFs). It would also raise the threshold for LAF status to $2 billion in public float, require a longer seasoning period before companies become subject to the most rigorous reporting requirements and extend scaled disclosure accommodations to a much larger population of issuers. In addition, companies classified as NAFs would be exempt from the auditor attestation requirement for internal control over financial reporting (ICFR) under Section 404(b) of the Sarbanes-Oxley Act.
Public Float Alone May Not Tell the Full Story
In its letter, CBIZ CPAs agrees that simplifying the filer framework could improve usability for both issuers and investors. The firm also supports providing newly public companies with a meaningful transition period before they face the full range of compliance obligations applicable to larger registrants.
However, CBIZ CPAs believes the proposal extends those accommodations too broadly by relying primarily on public float as the determining factor for eligibility. According to the firm, public float alone may not adequately reflect a company’s operational complexity, revenue scale or financial reporting risks. Large companies with significant revenues and complex operations may still fall below the proposed $2 billion public float threshold for a variety of reasons, including ownership structure or capital markets conditions.
A central concern raised by CBIZ CPAs is the proposal’s expansion of scaled financial statement disclosures under Article 8 of Regulation S-X. Historically, these streamlined reporting requirements were designed for smaller reporting companies with relatively limited operations.
Under the SEC’s proposal, however, companies with substantial revenues and complex business structures could qualify for scaled reporting solely because of their public float. CBIZ CPAs suggests that this could reduce comparability across issuers and increase information asymmetry for investors evaluating larger organizations. The firm believes investors benefit from robust, standardized financial statements that allow for consistent analysis and informed decision-making.
The Value of Independent Auditor Attestation
The comment letter also highlights the importance of auditor attestation over ICFR. While acknowledging the costs associated with Section 404(b) compliance, CBIZ CPAs notes that independent auditor involvement provides a valuable assurance mechanism for investors, audit committees and the broader capital markets ecosystem.
According to the letter, auditor attestation strengthens confidence in management’s assessment of internal controls, supports the early identification and remediation of control deficiencies, and contributes to higher-quality financial reporting. The firm points to research and previous feedback from investor groups that suggest the benefits of stronger internal controls should be weighed alongside compliance costs when evaluating potential exemptions.
A Revenue-Based Alternative
Rather than relying exclusively on public float thresholds, CBIZ CPAs recommends incorporating a revenue-based measure when determining eligibility for the broadest reporting accommodations.
One alternative proposed in the letter would require companies to have both a public float below $2 billion and annual revenue below the current Emerging Growth Company threshold of $1.235 billion to qualify for the full set of NAF accommodations. CBIZ CPAs believes this approach would more closely align disclosure obligations with company size and complexity while preserving investor access to decision-useful information.
The firm also recommends considering shorter deferral periods for Section 404(b) compliance or implementing trigger-based requirements tied to indicators such as revenue growth, acquisitions and operational complexity. These approaches could provide emerging companies with flexibility while ensuring that more complex issuers remain subject to appropriate levels of oversight.
Looking Ahead
By balancing capital formation objectives with investor protection considerations, the SEC can create a framework that promotes market accessibility without sacrificing the reliability, comparability and transparency that investors depend on when making capital allocation decisions. CBIZ CPAs’ recommendations are intended to help achieve that balance while preserving confidence in the U.S. public company reporting system.
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“CBIZ” is the brand name under which CBIZ CPAs P.C. and CBIZ, Inc. and its subsidiaries, including CBIZ Advisors, LLC, provide professional services. CBIZ CPAs P.C. and CBIZ, Inc. (and its subsidiaries) practice as an alternative practice structure in accordance with the AICPA Code of Professional Conduct and applicable law, regulations, and professional standards. CBIZ CPAs P.C. is a licensed independent CPA firm that provides attest services to its clients. CBIZ, Inc. and its subsidiary entities provide tax, advisory, and consulting services to their clients. CBIZ, Inc. and its subsidiary entities are not licensed CPA firms and, therefore, cannot provide attest services.
