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SEC 2400 - Accountants' consents
Publication date: 30 Jun 2023
us PwC SEC Volume 2400
.1 General
.11 What is an accountants’ consent and why is it required?
An accountants’ consent is a document signed by an independent accountant and provided to the issuer indicating that the independent accountant “consents” to the use of its report in a Securities Act registration statement. The SEC staff has indicated that the primary purpose of obtaining an accountants’ consent is to ensure that the independent accountant is aware of the use of its report and the context in which it is used. See SEC FRM 4810.1.
The requirement for an issuer to file an accountants’ consent is set forth in Section 7 of the Securities Act, which states in part:
"If any accountant, engineer, or appraiser, or any person whose profession gives authority to a statement made by him, is named as having prepared or certified any part of the registration statement, or is named as having prepared or certified a report or valuation for use in connection with the registration statement, the written consent of such person shall be filed with the registration statement." |
The SEC implemented the Securities Act consent requirements primarily through Securities Act Rule 436 which requires an SEC registrant to file a written consent from an expert as an exhibit to a Securities Act registration statement if:
– any portion of an expert’s report/opinion is quoted or summarized in the registration statement or prospectus; or
– the registration statement states that any information contained in it has been reviewed/passed upon by a person and that the information is set forth in the registration statement upon the authority of that person as an expert or in reliance on that person as an expert.
See SEC 2400.901 for additional guidance.
.12 When must the SEC’s consent requirements be evaluated?
The SEC’s consent requirements must be evaluated whenever an audit report is included or incorporated by reference in a Securities Act registration statement (including a post-effective amendment). Examples of Securities Act registration statements which generally trigger a requirement to evaluate the SEC’s consent requirements include filings on Form S-1, F-1, S-3, F-3, S-4, F-4, S-8, and S-11. An accountants’ consent is typically included as Exhibit 23 to the relevant SEC filing. See S-K 601(b)(23).
Example – Audit report is included in a Securities Act registration statement
Facts: Company A, a private company, is preparing to file a registration statement on Form S-1 for its initial public offering of common stock. The Form S-1 will include Company A’s financial statements as of December 31, 2022 and 2021 and for each of the three years in the period ended December 31, 2022 together with an audit report on those financial statements.
Analysis: Company A will need to file an accountants’ consent in the initially filed Form S-1.
[Editor’s note: Under certain circumstances, the SEC permits companies to submit draft Securities Act registration statements for non-public review. These draft registration statements are not considered “filed” with the SEC and, therefore, do not require an accountants’ consent. See JOBS Act Title l FAQ Question 52]
Example - Audit report is incorporated by reference in a new or amended Securities Act registration statement
Facts: In April 2023, Company B, an existing SEC registrant, files a new registration statement on Form S-3. The Form S-3 incorporates by reference Company B’s Form 10-K for the year ended December 31, 2022. Company B’s 2022 Form 10-K includes its financial statements as of December 31, 2022 and 2021 and for each of the three years in the period ended December 31, 2022 together with an audit report on those financial statements.
Analysis: Company B will need to file an accountants’ consent in the initially filed Form S-3.
See SEC 2400.902 for additional guidance.
.121 When is an accountants’ consent required in connection with an amendment to a Securities Act registration statement?
As noted above, the SEC’s consent requirements must be considered when a registration statement is initially filed under the Securities Act. Additionally, the SEC staff has indicated that a new consent is required in connection with an amendment:
– whenever any change, other than typographical, is made to the financial statements;
– if there have been intervening events since the prior filing that are material to the company; or
– prior to the effectiveness of a registration statement if an extended period of time passes since the last filing (the SEC staff generally considers any period of time which is more than 30 days to be an "extended period of time.")
See SEC FRM 4810.3.
.13 Since the SEC’s consent requirements are triggered by Securities Act registration statements, why is an accountants’ consent oftentimes filed with a Form 10-K or Form 8-K?
Even though the SEC’s consent requirements are generally driven by Securities Act registration statements, an accountants’ consent is oftentimes filed as an exhibit to a filing made under the Exchange Act (e.g., Form 10-K or Form 8-K) when that Exchange Act filing includes an audit report and the Exchange Act report is automatically incorporated by reference into a previously filed Securities Act registration statement. The automatic incorporation of a later filed Exchange Act report into a previously filed registration statement is sometimes referred to as “forward incorporation.” See Securities Act Rule 439.
For instance, Item 12(b) of Form S-3 requires registrants to incorporate by reference all Exchange Act reports (e.g., Form 10-K, Form 10-Q or Form 8-K) “subsequently filed” pursuant to Sections 13(a), 13(c), 14, or 15(d) of the Exchange Act before the termination of the offering. Accordingly, Form S-3 registration statements are considered "evergreen" in that the offering materials are updated by each subsequently filed Exchange Act report. A similar concept applies to Form S-8.
[Editor’s note: See Securities Act Form CDI 123.05 for guidance on Exchange Act filings made after the date of the initial registration statement and prior to effectiveness of the registration statement.]
Any subsequently required consents may be included in the material that is subsequently filed (e.g., as an exhibit to Form 10-K) or may be filed by a post-effective amendment to the registration statement no later than the date on which the material is filed.
Including a Form S-8 or Form S-3 consent in a Form 10-K is appropriate only in the circumstance of a continuous offering. It is not to be used when a Form S-8 or Form S-3 is not yet filed or is no longer effective.
Example – Audit report is automatically incorporated by reference in an existing Securities Act registration statement
Facts: Company C, an existing SEC registrant, has an effective registration statement on Form S-8. When Company C files its Form 10-K for the year ended December 31, 2022, it will include an audit report on Company C’s financial statements as of December 31, 2022 and 2021 and for each of the three years in the period ended December 31, 2022.
Analysis: When Company C files its 2022 Form 10-K, it will be automatically incorporated by reference into the effective Form S-8. Accordingly, Company C is required to file an accountants’ consent to the incorporation by reference of the audit report into Company C’s Form S-8. Company C will accomplish this by including the accountant’s consent as Exhibit 23 to its 2022 Form 10-K. If Company C had not previously filed a Securities Act registration statement into which its 2022 Form 10-K would be automatically incorporated when filed, then no accountants’ consent would be required at the time the 2022 Form 10-K is filed.
.2 Form of consent
.21 What are some of the factors that can have an impact on the form of an accountants’ consent?
The form of an accountants’ consent will depend on a number of factors, including (but not limited to):
– whether or not the entity whose financial statements are reported on is a registrant;
– the nature of the filing (e.g., an Exchange Act report that is incorporated by reference into an already effective registration statement vs. a new registration statement that includes/incorporates the audit report);
– whether the auditor has reported on the effectiveness of internal control over financial reporting;
– whether the auditor has reported on financial statement schedules (e.g., pursuant to S-X 5-04) and whether the auditor has issued a single report or two reports;
– whether the auditor is referred to as an "Expert" in a registration statement;
– whether the auditor has "dual dated" its report(s).
[Editor's note: It is not appropriate to issue a consent with respect to the inclusion/incorporation by reference of a report on a review of interim financial information in a Securities Act registration statement. However, see SEC 2400.7 regarding the issuer's need to provide an accountant's "awareness letter" in such circumstances.]
.22 Is an accountants’ consent required to be addressed to either the issuer or the SEC?
No. Since a consent does not require any expression of opinion, it is not necessary to address the consent as in the case of a report on financial statements.
.23 What date is used for an accountants’ consent?
An accountants’ consent is usually dated as of or within a few days of filing a Securities Act registration statement.
The date of the consent should not be after the date through which subsequent events have been evaluated. Typically, the consent date would coincide with the completion of the auditor’s "keeping current" procedures. The consent date might not be the same as the audit opinion date (e.g., when a newly filed Securities Act registration statement incorporates by reference an earlier filed Form 10-K).
When a consent is being provided in connection with a Form 10-K that will be automatically incorporated by reference into an already effective Securities Act registration statement, the date of the consent will generally be the same as the audit report date. One exception to this general expectation arises when the accountants’ consent is being requested from a predecessor auditor. In that case, the date of the accountants’ consent obtained from the predecessor auditor will be a current date while its audit report date is most likely the date of its original report.
.231 Does an accountants’ consent need to refer to all dates and related explanations when an audit report is dual dated?
Yes. When the audit report is dual dated, the body of the accountants’ consent refers to all dates and related explanation(s) appearing in the date block of the report exactly as they appear in the report. The actual date of the consent, however, will be the date the consent is signed.
.24 Does an accountants’ consent refer to audit opinion modifications?
There is no need to refer to opinion qualifications, explanatory paragraphs or references to other auditors in the body of an accountants’ consent.
.25 Does an accountants’ consent need to refer to an audit report relating to the company’s internal control over financial reporting if it is included or incorporated by reference in a Securities Act registration statement?
Yes. If the auditor’s report on internal control over financial reporting is included or incorporated by reference in a Securities Act registration statement, the registrant is required to file a related accountants’ consent.
.251 Does an accountants’ consent need to refer to the reference to the auditor in management’s report on internal control over financial reporting required by S-K 308(a)(4)?
No. A registrant that includes an audit report on internal control over financial reporting in its Form 10-K, is also required to state in management’s report on internal control over financial reporting that the auditor audited both the internal control over financial reporting and the registrant’s financial statements (see S-K 308(a)(4)). However, the registrant is not required to file an accountants’ consent to that reference even if it is included or incorporated by reference in a Securities Act registration statement. This is true even though the registrant is required to file an accountants’ consent to the inclusion or incorporation by reference of the audit report on the effectiveness of the registrant’s internal control over financial reporting in a Securities Act registration statement (see SEC 2400.25)
.26 Does an accountants’ consent need to refer to financial statement schedules when they are covered by an audit report?
Yes. The audit report on the primary financial statements will include a reference to the financial statement schedules or, in some cases, there will be a separate audit report relating to the financial statement schedules. An accountants’ consent refers to the audit report on the financial statements and financial statement schedule(s), or both audit reports on the financial statements and financial statement schedule(s), as applicable. See SEC FRM 4210.2.
[Editor’s note: When an Annual Report to Shareholders is incorporated by reference in Form 10-K and the Form 10-K is, in turn, incorporated by reference in a Securities Act registration statement, the accountants’ consent refers to both the incorporation by reference of the auditors’ report appearing in the Annual Report to Shareholders and, if applicable, to the incorporation by reference of the auditors’ report on the "Financial Statement Schedules" included in the Form 10-K, as appropriate.]
.27 Does an accountants’ consent need to refer to “experts” language included in a registration statement?
Generally, yes. Many Securities Act registration statements include "experts" disclosure which typically indicates that the audited financial statements have been included or incorporated by reference in the registration statement in reliance on the related audit report, given on the auditor’s authority as experts in auditing and accounting. The SEC requires the registrant to provide an accountants’ consent to this reference. See SEC 2300 for a complete discussion of “experts” disclosure.
.28 Does an accountants' consent need to be modified when the introductory note to selected or summary financial data tables refers to the auditor?
If a registrant refers to an auditor in an introductory note to any selected or summary financial data tables, the SEC staff has historically required the registrant to file an accountants’ consent to that use of the firm's name if the introductory note is included or incorporated by reference in a Securities Act registration statement. The SEC staff has indicated that an accountants’ consent is necessary even though the audit report does not extend to the presentation of selected or summary financial data tables. The reference in an accountants’ consent to the use of its name in an introductory note to any selected or summary financial data table is in addition to the reference to the use of the firm’s audit report or any references to the firm in an “experts” disclosure.
[Editor’s note: The SEC staff has not publicly stated any change to their historical expectation even though the SEC has rescinded S-K 301.]
.3 Special situations
.31 What is the typical form of an accountants’ consent when a “preamble” report is issued?
In limited situations, the SEC staff will permit a preliminary filing to include financial statements which reflect a future corporate event or transaction (e.g., a stock split) that will take place before the registration statement becomes effective and will require retrospective treatment in the registrant’s historical financial statements. By allowing the registrant to file historical financial statements reflecting the transaction before it happens, the SEC staff can streamline its review process. When a registrant files its financial statements in this manner, the auditor issues a type of report commonly referred to as a “preamble” report. When the auditor issues a “preamble” report, the form of accountants’ consent is a “preamble” consent, when a consent is required. See SEC FRM 4710 for additional information relating to “preamble” (or “to be issued”) reports.
.32 Does an accountants’ consent need to be modified when an auditor is engaged to report on modifications to financial statements previously audited by a predecessor auditor?
When the auditor has been engaged to report on modifications to financial statements previously audited by a predecessor auditor, the accountants’ consent does not need to be modified (i.e., the statement that the report "relates" to the financial statements is sufficient). A similar analysis would apply in situations in which the auditor is the predecessor auditor and reissues its report on pre-modification financial statements. See SEC 2400.903 for additional guidance.
.33 Will the SEC waive the consent requirements in situations involving hostile takeovers?
In rare circumstances, such as situations involving hostile takeover attempts, the SEC may waive the requirement for a registrant to provide a consent. In these cases, the registrant must apply for the waiver and provide an affidavit complying with Securities Act Rule 437. See SEC FRM 4810.5.
.34 How do the SEC’s accountants’ consent requirements apply when a registrant files a new Securities Act registration statement that includes or incorporates by reference both (i) the audited financial statements that have been retrospectively revised and (ii) the pre-revision audited financial statements?
There are several reasons why a registrant might revise its previously filed audited financial statements. The most common reasons for revising previously issued financial statements are to reflect a discontinued operation, change in reportable segments or change in accounting principle that requires retrospective application (see SEC 2120.23). When the revised financial statements need to be filed prior to the filing of the next Form 10-K, the revised financial statements are usually filed under Item 8.01 of Form 8-K.
If a registrant files a new or amended Securities Act registration statement that incorporates by reference (i) the audited financial statements that have been retrospectively revised (e.g., filed under Item 8.01 of Form 8-K) and (ii) the pre-revision financial statements (e.g., included in the most recent Form 10-K), then the auditor only consents to its report on the revised financial statements because the revised financial statements supersede the pre-revision financial statements. See SEC FRM 4810.6, Securities Act Rule 412(c) and footnote 25 to SEC Release 33-6383 which reads as follows:
FN 25 A number of commentators expressed concern that outdated financial statements from the latest Form 10-K would be incorporated by reference when restated financial statements are included in the prospectus or are incorporated by reference because of an accounting change or pooling subsequent to the most recent fiscal year end. Additionally, concern was expressed that the staff may require an accountant's consent for such outdated financial statements. Rule 412 of Regulation C would operate to make the restated financial statements supersede the Form 10-K financial statements and would render the superseded items not a part of the registration statement or prospectus for purposes of the Securities Act. Therefore, no consent would be required for the superseded financial statements. |
Consider the following example:
Facts: Company X, a calendar year-end SEC registrant, filed its 2022 Form 10-K on February 23, 2023. Company X's 2022 Form 10-K included audited financial statements as of December 31, 2022 and 2021 and for each of the three years in the period ended December 31, 2022. In March 2023, Company X disposed of Subsidiary A. Subsidiary A was properly not reflected as a discontinued operation in Company X’s 2022 Form 10-K. When Company X prepared its March 31, 2023 Form 10-Q, it reflected Subsidiary A as a discontinued operation for both 2023 and 2022.
Company X intends to file a new registration statement on Form S-3 in June 2023. Pursuant to Item 11(b) of Form S-3 (and the associated SEC staff guidance set forth in SEC FRM 13210.1), Company X has determined that it must retrospectively revise the audited financial statements originally included in its 2022 Form 10-K to reflect Subsidiary A as a discontinued operation. Company X filed the revised financial statements (and other relevant information -- such as MD&A) under Item 8.01 of Form 8-K.
Analysis: Item 12 of Form S-3 requires Company X to incorporate by reference its latest Form 10-K as well as specified subsequently filed Exchange Act reports. Accordingly, the 2020-2022 financial statements will appear to be incorporated by reference into the new Form S-3 twice -- once (in their original, unrevised form) by incorporating by reference the 2022 Form 10-K and a second time (as revised) by incorporating by reference the Item 8.01 Form 8-K. The auditor only consents to the incorporation by reference of its audit report that is included in the Item 8.01 Form 8-K (i.e., the audit report on the revised financial statements). The auditor does not consent to the incorporation by reference of its audit report included in Company X’s Form 10-K because that report and the associated financial statements were superseded by the corresponding audit report and financial statements included in the Item 8.01 Form 8-K.
.4 Consents in other documents
.41 Is an accountants’ consent required in a prospectus supplement?
Generally, no. The filing of a prospectus supplement generally does not result in a new effective date for the auditor, and therefore would not require the filing of a consent, unless the prospectus supplement includes new audited financial statements as to which the accountant is an expert (e.g., restated financial statements or financial statements required by S-X 3-05 or 3-14). In that case, a new consent would be included in a post-effective amendment to the registration statement, or by filing an Exchange Act report such as a Form 10-K or Form 8-K. See Section V.B.1.b.(iii)(B) of SEC Release 33-8591, Securities Offering Reform.
If a registrant requests evidence that the auditor is aware that its audit report on financial statements that are not “new audited financial statements” is included or incorporated by reference in a prospectus supplement, then the auditor can provide a transmittal letter with a manually signed copy of the audit report on the financial statements included or incorporated by reference in the prospectus supplement. That transmittal letter is not included within the prospectus supplement.
.42 Is an accountants’ consent required in a free writing prospectus?
A free writing prospectus (defined in Securities Act Rule 405) generally does not require an accountants’ consent because it is generally not filed as part of a registration statement.
.43 Is an accountants’ consent required in a Form 11-K for employee benefit plan financial statements?
Certain employee benefit plans which register interests in the plan on Form S-8 are required to file periodic reports on Form 11-K which are incorporated by reference in Form S-8. An accountant’s consent is required with respect to the auditor’s report on the employee benefit plan annual financial statements which is incorporated by reference in a registration statement on Form S-8.
.44 Is an accountants’ consent required in connection with a Regulation A offering statement?
Item 17(11) of Form 1-A requires an accountants’ consent when an audit report is included in the offering statement. Every amendment to a Form 1-A that includes amended audited financial statements must also include the auditor’s consent (see Securities Act Rule 252(f)(ii)). See SEC 2155 for additional information relating to securities offerings under Regulation A.
[Editor’s note: We do not believe a Regulation A offering statement should contain an "Experts" section because the offering is exempt from Securities Act registration. Accordingly, the accountants’ consent in a Regulation A offering statement does not refer to an "Experts" disclosure. See SEC 2300.16.]
.441 Is an accountants’ consent required in connection with a Form 1-K of a Regulation A issuer?
The SEC staff has indicated that it would not object if an issuer with an ongoing Regulation A reporting obligation does not include an accountants’ consent in a Form 1-K. See Securities Act Rules CDI 182.19.
.45 Is a franchisor required to obtain an auditor’s authorization letter in connection with a franchise disclosure document?
Franchise disclosure documents (“FDDs”) follow the franchise registration and disclosure guidelines established by the North American Securities Administrators Association (“NASAA”) in accordance with the Federal Trade Commission’s Franchise Rule. The NASAA guidelines can be found at http://www.nasaa.org/industry-resources/corporation-finance/franchise-resources/.
When the FDD includes audited financial statements, the franchisor is required to obtain the auditor’s authorization for the inclusion of its audit report in the FDD.
The authorization letter is not a required component of the FDD to be distributed to potential franchisees. The authorization letter is to be furnished to only the franchisor unless also required by the state agency.
[Editor’s note: Form F of the NASAA guidelines is an example “consent of accountant,” which includes the phrase “as it may be amended” in relation to the issue date of the FDD. Consistent with AU-C 945.A23, we do not believe the phrase “as it may be amended” should be included in the auditor authorization letter.]
.46 Is an accountants’ consent required in a Form 10?
A registration statement on Form 10 (e.g., filed in connection with a spin-off) is an Exchange Act registration statement, and a consent would ordinarily not be required. See SEC 2400.905 for additional guidance.
.49 Is an accountants’ consent required in other non-Securities Act offering documents?
Although typically not required from a regulatory or legal standpoint, a consent may be requested in connection with non-Securities Act offerings such as securities offered by state governments or their municipalities (e.g., pollution control bonds), offerings in foreign jurisdictions, intrastate offerings, Regulation D offerings, or Rule 144A offerings. Use of the word consent in such situations is avoided because it may be misinterpreted to imply that the auditor is accepting liability related to the offering as if it were a registered offering under the Securities Act. If a form of consent is requested, it is drafted as a separate letter addressed only to the company. The letter is worded pursuant to PCAOB AI 26.17 or AU-C 945-A21, and, except in limited circumstances, is not included in the offering materials. See SEC 2400.23 for guidance regarding the date to use in this circumstance.
.5 Communication with audit committees
See SEC 3130.6 regarding the audit committee communications specified by S-X 2-07.
.6 Public company accounting oversight board accounting support fee
The PCAOB calculates an accounting support fee that the Board bills to issuers. PCAOB Rule 7104(b)(1) provides that a registered public accounting firm generally may not sign an unqualified audit opinion with respect to an issuer’s financial statements, or issue a consent to include an audit opinion issued previously, unless the registered public accounting firm has ascertained that the issuer has no outstanding past-due share of the accounting support fee. Although the PCAOB does provide for a few exceptions to this general rule, those exceptions are limited in nature. See SEC 3130.918 for further information.
.7 Awareness letters relating to interim review reports
In limited circumstances, a registrant may include a signed review report on unaudited interim financial statements (e.g., a PCAOB AS 4105 report) in a filing that includes those unaudited interim financial statements (e.g., in a Form 10-Q). Securities Act Rule 436 explicitly states that an interim review report is not a "report" or a "part" of the registration statement prepared or certified by the auditor within the meaning of Sections 7 and 11 of the Securities Act. Accordingly, the registrant is not required to obtain an accountants’ consent relating to any review report that may be included or incorporated by reference in a Securities Act registration statement.
However, when an interim review report is included or incorporated by reference in a Securities Act registration statement, the registrant is required to file an “awareness letter” from the auditor that issued the review report. The awareness letter is addressed to the SEC and acknowledges that the auditor is aware that its report is included/incorporated by reference in the Securities Act registration statement. The awareness letter is filed as Exhibit 15 to the relevant document. See S-K 601(b)(15).
Consider the following example:
Facts: Company X, an existing calendar year-end SEC registrant, includes signed review reports on unaudited interim financial information in its Form 10-Q filings. Company X intends to file a new registration statement on Form S-3 in June 2023.
Analysis: Company X is required to incorporate by reference its March 31, 2023 Form 10-Q into the new Form S-3. Since that Form 10-Q includes a review report on unaudited interim financial information, Company X is required to include an “awareness letter” from its auditor as Exhibit 15 to the new Form S-3.
The above example relates to the inclusion of an awareness letter in a new registration statement. If the review report on interim financial information is included in a Form 10-Q that is automatically incorporated by reference into a previously filed Securities Act registration statement, then an awareness letter is filed as Exhibit 15 to the Form 10-Q.
Consider the following example:
Facts: Company Z, an existing calendar year-end SEC registrant, has an effective shelf registration statement on Form S-3. Company Z will include a signed review report on unaudited interim financial information in its March 31, 2023 Form 10-Q.
Analysis: Company Z’s March 31, 2023 Form 10-Q will be automatically incorporated by reference into the effective Form S-3. Since that Form 10-Q will include a review report on unaudited interim financial information, Company Z will be required to include an “awareness letter” as Exhibit 15 to the March 31, 2023 Form 10-Q.
It is important to note that the requirements for the registrant to file an awareness letter only apply if a review report on unaudited interim financial information is included or incorporated by reference in a Securities Act registration statement. There is no requirement for a registrant to provide an awareness letter if a review report on interim financial information is not included or incorporated by reference in the registration statement (e.g., if the auditor provided a signed interim review report to the registrant but the registrant did not file the interim review report).
[Editor's note: See SEC 2300.3 for a discussion of modifications to "Experts" language and disclosures to be included in Form 10-Q relating to interim review reports that are included or incorporated by reference in Securities Act registration statements.]
.9 Frequently asked questions
.901 Does an auditor ordinarily agree to enter into a contractual commitment to provide an accountants’ consent for future filings?
We have seen limited instances in which a company has requested the auditor to include provisions in the engagement letter to the effect that, in the event the client-auditor relationship is terminated, the auditor agrees to consent to the continued use of its report in filings after termination. In some cases, the provision provides that the agreement is subject to the auditor completing its professional responsibilities.
Because the auditor is unable to predict the various circumstances and events that could occur in the future, in our experience, auditors do not agree to these types of commitments.
.902 Are there situations in which a consent of a third party other than an auditor is required?
Yes. Securities Act Rule 436 is not limited to auditors. Rule 436 outlines the requirements for a written consent of any third-party expert referenced in a filing included or incorporated by reference in a Securities Act registration statement. The SEC staff has provided interpretive guidance relating to certain situations in which the consent of a third party other than an auditor might be required in Securities Act Rules CDIs 233.01 through 233.08. Registrants should consider consulting with their legal counsel to determine whether a third-party consent is required.
.903 Does a predecessor auditor need to be independent at the time of signing an accountants’ consent with respect to a previously issued audit report that is included or incorporated by reference in a new or amended Securities Act registration statement?
Generally, no. However, a predecessor auditor needs to consider its independence if it is required to perform new audit work (e.g., in connection with a change to the previously filed financial statements to reflect a material discontinued operation or retrospective accounting change). See SEC FRM 4830.7.
.904 Is an accountants’ consent required for a pre-effective Form S-3 when a Form 10-Q is filed?
.905 Is an accountants’ consent required when audited financial statements filed under another Act are incorporated by reference into an Exchange Act report?
Typically, consents included in Exchange Act reports (e.g., Form 10-K) are included because the Exchange Act report is incorporated by reference into a previously filed Securities Act registration statement. However, when audited financial statements filed under an Act administered by the SEC other than the Exchange Act (e.g., the Securities Act) are incorporated by reference into an Exchange Act report, then the registrant is required to file an accountants’ consent to the incorporation by reference of its report into that Exchange Act report as an exhibit to that report. See Exchange Act Rule 12b-36.
.906 Are there situations when a consent is not required for financial statements which are incorporated by reference into a Securities Act Registration Statement?
Securities Act Rule 439 requires, in most circumstances, the filing of a written consent to the use of an audit report which is incorporated by reference in a Securities Act registration statement (e.g., when the audit report is incorporated by reference in Forms S-1, S-3, S-4, S-8, or S-11). There are, however, certain limited circumstances in which a registrant is not required to provide an accountants’ consent with respect to an audit report that is incorporated by reference into a Securities Act registration statement. These circumstances include situations in which:
- the same financial statements are presented in the registration statement and are also incorporated by reference; or
- the audited financial statements incorporated by reference in the registration statement have been superseded by revised financial statements which are also included or incorporated by reference in the registration statement (see SEC FRM 4810.6 and SEC 2400.34).
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