INSIGHT

What Comment Letters Reveal About the SEC’s Proposed Rule on Filer Status Simplification 

Jeff Dietrich • October 28, 2026

Services: Public Company Audit

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On May 19, 2026, the Securities and Exchange Commission (SEC) released a proposed rule, Enhancement of Emerging Growth Company Accommodations and Simplification of Filer Status for Reporting Companies (File No. S7-2026-18). As written, it would represent what is likely the most significant change to filer status since the Sarbanes-Oxley Act (SOX) became law in 2002. 

The public comment period closed on July 20, 2026, and the response was substantial. Registrants, exchanges, investors, accounting firms, academics, and advocacy groups submitted more than 190 comment letters. Most of you have not had time to read many of them (or any), so we combed through the full record. Below is a recap of what the SEC proposed, where commenters landed, and what the debate could mean for your company’s reporting obligations. 

What the Proposed Rule Would Change 

The proposal would replace today’s layered filer framework with a simpler structure. Here are the most prominent changes: 

• Two primary filer statuses. Companies would be classified as either a Large Accelerated Filer (LAF) or a Non-Accelerated Filer (NAF). Accelerated Filer (AF) and Smaller Reporting Company (SRC) statuses would no longer exist. Emerging Growth Company (EGC) status would remain, but most EGC accommodations and substantially all scaled disclosure accommodations now available to SRCs would extend to all NAFs, such as two years of comparative financial statements rather than three and reduced executive compensation disclosure. 
• Creation of a new filer status. The new rule would also introduce a new filer status – the smallest NAF (SNF). This grouping would consist of NAFs reporting total assets of $35 million or less as of the end of a registrant’s two most recent second fiscal quarters. These companies would be granted an additional 30 days to file their Form 10-K filings and 5 days for their Form 10-Q filings. 
• Less overlap. Eliminating combinations such as SRC/EGC or AF/SRC/EGC would remove much of the confusion in determining which rules apply. 
• A $2 billion LAF threshold. A company would need $2 billion or more in public float to be an LAF, up from $700 million today. Any registrant below $2 billion would be an NAF, regardless of how long it has been filing. Revenue would no longer factor into filer status. 
• A new measurement approach. Public float would still be measured at the end of the fiscal second quarter, but as the average daily public float over the 10 trading days ending on the last day of that quarter rather than on a single date. 
• A sustained trigger. A company would need to exceed the $2 billion threshold in two consecutive years before becoming an LAF. For example, a company that crosses the threshold in both 2027 and 2028 would be an LAF at year-end 2028. 
• A five-year seasoning period. New registrants would be NAFs until they complete 60 months of consecutive Exchange Act reporting, at which point they would be evaluated for LAF status. 
• Familiar filing deadlines, with one new subcategory. LAFs would keep their current deadlines of 60 days for Form 10-K and 40 days for Form 10-Q, and most NAFs would keep 90 and 45 days. SNFs would receive extended deadlines of 120 days for Form 10-K and 50 days for Form 10-Q. 
• Auditor attestation for LAFs only. Most significantly, only LAFs would be subject to SOX Section 404(b), which requires an auditor attestation on the effectiveness of internal control over financial reporting (ICFR). 

If adopted as written, the proposal would sharply reduce the number of companies subject to Section 404(b). The SEC estimates the share of registrants classified as LAFs would fall from about 35% to 19%, while the NAF population would grow by approximately 27%. A significant number of current AFs and smaller LAFs would no longer need an auditor attestation on ICFR. 

Where the Comment Letters Landed 

The comment record does not split cleanly into supporters and opponents. Most commenters, including many critics, accept simplification in principle. They diverge on how much substantive relief should follow from the new labels. The table below shows how each element of the proposal fared, from broadest support to most controversial. 

How Different Respondent Groups Saw the Proposal 

Issuers, Exchanges, and Capital Markets Groups 

This group generally supported the proposal substantially as written. Commenters pointed to a lower cost of being public, more predictable filer status, and a more attractive IPO environment, noting that fixed compliance costs weigh most heavily on smaller companies. Some asked for interim relief so companies would not have to make a costly, short-lived move into AF status before a final rule takes effect. A few cautioned that market competitiveness depends on investor confidence as much as lower costs. 

Accounting Firms and the Accounting Profession 

Accounting firms largely supported simplifying the labels while calling for the relief to be recalibrated. Section 404(b) was their central concern, specifically its effect on the reliability of reporting, IT and control risk, auditor choice, and audit market capacity. They questioned whether a single $2 billion line should drive filing deadlines, attestation, compensation disclosure, and the number of years of financial statements presented. Several suggested modernizing management guidance and PCAOB inspections as an alternative to removing attestation and urged the SEC to conduct more investor outreach. 

Institutional Investors, Pension Funds, Labor Groups, and State Securities Regulators 

These commenters opposed the substantive expansion of accommodations. They view say-on-pay and compensation disclosure as governance tools and argued that a management-only ICFR assessment is not an equivalent substitute for auditor attestation. In their view, the proposal shifts costs from issuers to investors by widening the information gap. Some also questioned the SEC’s statutory authority and the evidence linking disclosure burden to fewer IPOs. 

Academics and Former Regulators 

This group was skeptical of the economic case. Commenters cited research suggesting the aggregate costs of eliminating attestation may exceed the audit fee savings, and attributed the decline in the number of public companies largely to the availability of private capital. They also raised concerns about bundling accommodations, the cumulative effect alongside other SEC proposals, and the length of the comment period. 

Individual Commenters 

Individual letters were polarized and leaned toward opposition, with many objecting to the removal of several protections at once, including attestation, risk factors, market risk disclosure, and compensation disclosure. One practitioner suggested that a sufficiently independent internal audit function could provide an alternative form of assurance for exempt companies. 

Across all of these groups, one tension stands out. Issuers capture the compliance savings directly, while the cost of replacing lost standardized information and independent assurance falls on investors, analysts, and lenders. The debate is less about whether the current system is too complex and more about who bears the cost when disclosure and assurance are removed. 

The Pressure Points Likely to Shape a Final Rule 

Section 404(b) Auditor Attestation 

This is the primary fault line. Issuers emphasize the direct savings on audit costs. The accounting profession, investors, and academics counter that auditor attestation surfaces material weaknesses that management-only assessments miss, particularly IT-related deficiencies, and that a sharp drop in integrated audits could reduce auditor choice and capacity. Rather than eliminating attestation outright, several commenters pointed to updated management guidance and modernized PCAOB inspections as ways to ease the burden. 

The $2 Billion Threshold 

Supporters see $2 billion as an overdue recalibration of a line drawn more than two decades ago. Critics argue it would sweep mature, well-resourced companies into the NAF category. Alternatives raised in the letters include keeping the $700 million threshold, indexing it to inflation (roughly $1.1 billion to $1.2 billion), setting an intermediate threshold of $1 billion, or adding a revenue measure to public float, which would reintroduce one of the elements that makes the current framework complex. 

The Five-Year Seasoning Period 

IPO-focused commenters welcomed the longer on-ramp. Others noted that it treats a small IPO and a multibillion-dollar listing identically, allowing large new registrants to defer Section 404(b), accelerated deadlines, and full disclosure for five years. Suggested fixes include a 24- to 36-month seasoning period or an earlier exit for larger issuers. 

Executive Compensation and Risk Disclosures 

Investors see say-on-pay votes and compensation disclosure as tools for evaluating boards and voting proxies. Narrower alternatives in the letters included a triennial say-on-pay vote for NAFs and retaining the golden parachute vote. Investors and academics also questioned allowing companies near $2 billion in public float to omit risk factor and market risk disclosure, and some raised concerns about reduced comparability across peer groups. 

What This Could Mean for Your Company 

The comment record suggests the SEC has a strong basis for simplifying filer status, but a much less settled basis for treating every company below $2 billion in public float as though it shares the same reporting capacity, risk profile, and investor information needs. Expect the debate over a final rule to focus on calibration rather than on whether reform is warranted. 

Until the SEC adopts a final rule, the current filer status framework and its requirements remain in effect. In the meantime, a few questions are worth working through with your finance team and audit committee: 

• Where would your company land under the proposed framework, and how would the changes in filing deadlines, disclosure requirements, and attestation obligations impact you? 
• If your company were no longer required to be subject to Section 404(b) attestation, what would your next course of action be? Reminder – management’s own assessment of ICFR would still be required. 
• If you are planning an IPO, how would a five-year seasoning period, or a shorter one if the SEC revises it, affect your reporting roadmap? 
• If applicable, which scaled disclosures would you adopt, and how might your investors and analysts react to less information? 

How BPM Can Help 

Whether the final rule mirrors the proposal or lands somewhere in between, you will want a clear view of what it means for your reporting obligations. BPM, a PCAOB-registered accounting firm, has an SEC Assurance practice, with professionals, available to serve public companies and those preparing to go public meet their audit and internal control requirements, including Section 404(b) attestation. Our Risk Assurance and Advisory professionals support SOX Compliance needs, from readiness assessments and controls streamlining to documentation and testing management. Our Technical Accounting Group supports SEC Reporting needs, from drafting registration statements and preparing Forms 10-K and 10-Q to responding to SEC comment letters and assessing IPO readiness. 

These professionals can help you evaluate how the proposed changes would affect your company’s reporting obligations, plan for a range of outcomes, and consider the implications for stakeholders who rely on your financial reporting. Services are subject to applicable independence requirements. Contact us to start the conversation.