In December 2019, the American Institute of Certified Public Accountants (AICPA) revised its attestation standards to eliminate certain requirements for Agreed-Upon Procedures (AUP) engagements, thereby expanding the types of situations these engagements can be performed by independent accountants.

An AUP engagement is an attestation engagement in which a company engages an independent accountant to perform specific procedures on a subject matter and report its findings without providing an opinion or conclusion. The subject matter may be financial or nonfinancial information and the nature, timing, and extent of the procedures may vary based on the needs of the company requesting the AUP engagement.  Examples of purposes for AUP engagements include helping customers, suppliers, regulators and other users assess a company’s compliance with its own policies, generally accepted accounting principles in the United States (U.S. GAAP), contractual terms or government regulations.

The revised standards change the nature of an AUP engagement by requiring only the engaging party to agree with the procedures, eliminating the requirement that the accountant request a written assertion from the intended users of the AUP report agreeing to the suitability of the procedures. However, the intended users of the AUP report can still be asked to agree with the procedures, and use of the AUP report can still be restricted to such specified parties.

The revised standards also require new disclosures in all AUP reports that are intended to address the risk that the reports could be misunderstood by users. In the AUP report, the accountant must disclose that the procedures performed may not address or meet the needs of all users. As such, users of the AUP report are responsible for assessing the appropriateness of the procedures for their purposes.  In addition, accountants are no longer required to restrict the use of AUP reports to specified parties, allowing these reports to be used by companies to communicate information to a broader number of parties.

The revised standards are effective for AUP reports dated on or after July 15, 2021. However, early implementation is permitted. The revised standards are available here.

Tuesday, January 28, 2020
9:00 a.m. – 9:30 a.m. Registration/Breakfast
9:30 a.m. – 11:00 a.m. Program

To register, please click here.

While the IPO market remains active, companies continue to raise large sums of private capital through late stage private placements, with companies now taking an average of seven years to IPO. However, late stage investors and IPO investors expect that, from a corporate governance and financial accounting perspective, companies will begin preparing for their IPOs several years in advance.

Join our panel of experts for a roundtable discussion addressing:

  • The late stage private placement market;
  • Timing and process for late stage private placements;
  • Corporate governance best practices for sophisticated private companies;
  • Expectations regarding financial statements and investor communications;
  • Pursuing an IPO as a US-domiciled versus a foreign private issuer;
  • IPO readiness and what to do when; and
  • The state of the IPO market.


  • Rafi Carmeli, Viola Growth
  • Mike Gould, PricewaterhouseCoopers, LLP
  • Daniel Klausner, PricewaterhouseCoopers, LLP
  • Phyllis G. Korff, Mayer Brown LLP
  • Anna T. Pinedo, Mayer Brown LLP
  • Tomer Shani, Meitar Liquornik Geva Leshem Tal
  • Sam Zytko, PricewaterhouseCoopers, LLP

The event will take place at Mayer Brown’s New York office located at:
Mayer Brown LLP
1221 Avenue of the Americas
New York, NY 10020

On December 18, 2019, the Securities and Exchange Commission (“SEC”) proposed amendments to the definition of “accredited investor” and related amendments to the definition of “qualified institutional buyer.” The proposed amendments would have the effect, if adopted, of broadening the universe of individuals and entities that would qualify as accredited investors.

Read our Legal Update.

Today, the SEC’s Office for the Advocate for Small Business Capital Formation announced it will host its first Capital Call on January 23, 2020 at 1 pm ET.

This virtual conference will focus on the latest trends relating to capital formation by companies, ranging from startups to small cap companies, and will provide participants with an overview of the Office’s activity in 2019. The Office will also review the recommendations it has made to the SEC and Congress through its first annual report, which we covered in an earlier post.

The Capital Call can be accessed via the SEC’s website.

During the last two weeks of 2019, the US Securities and Exchange Commission offered guidance and reminders relating to the role of audit committees, international intellectual property and technology risks, and confidential treatment applications. This Legal Update provides further detail on—and discusses practical considerations regarding—these pronouncements, which public companies should take into account as the new year begins.

Read our Legal Update.

On December 30, 2019, the Chair of the Securities and Exchange Commission, the SEC’s Chief Accountant, and the Director of the SEC’s Division of Corporation Finance issued a joint statement regarding the role of audit committees in financial reporting, as well as their oversight responsibilities. The statement reminds audit committees, in connection with year-end reporting, that:

  • The audit committee contributes to setting the tone for a company’s financial reporting, contributing to creating and maintaining an environment that supports the integrity of the financial reporting process, and setting expectations for candid communications with the auditor and management. To set an appropriate tone at the top, an audit committee should communicate with the independent auditor to understand the audit strategy and status, and ask questions regarding issues identified by the auditor and understand their ultimate resolution.
  • Compliance with auditor independence rules is a shared responsibility of the audit firm, the issuer and its audit committee.
  • The audit committee plays an important role in contributing to management’s successful implementation of new GAAP standards, including the new revenue and lease standards, and in monitoring management’s processes to establish and monitor controls and procedures over adoption and transition of new standards.
  • Audit committees are responsible for overseeing ICFR, including in connection with their consideration of management’s assessment of ICFR effectiveness and, when applicable, the auditor’s attestation.

The joint statement also reminds audit committees of the year-end financial reporting process under PCAOB AS 1301, Communications with Audit Committees, which requires the auditor to communicate with the audit committee regarding certain matters related to the conduct of the audit and to obtain certain information from the audit committee relevant to the audit. The statement also reminds audit committees and issuers that the SEC Staff remains focused on the use of non-GAAP measures, LIBOR discontinuation and transition related risks, and the critical audit matters (“CAMs”) requirement, which will require that audit committees engage in a discussion with the auditors regarding the standard and each of the identified matters.

The full text of the joint statement can be found here.

The American Institute of Certified Public Accountants (“AICPA”) Auditing Standards Board issued Statement on Auditing Standards No. 138 and Statement on Standards for Attestation Engagements  No. 20 to amend the concept of materiality in the context of both audits of financial statements and attestation engagements. Under the previous standards, misstatements, including omissions, were considered to be material if they, individually or in the aggregate, “could reasonably be expected to influence the economic decisions of users.” The new standards require that there be “a substantial likelihood that [misstatements or omissions] would influence the judgment” made by certain users, which is in greater alignment with the definitions of materiality used by the Supreme Court, the Public Company Accounting Oversight Board, the Securities and Exchange Commission and the Financial Accounting Standards Board. The standards are effective for audits of financial statements for periods ending on or after December 15, 2020 and for practitioners’ examination and review reports dated on or after December 15, 2020.

The Securities and Exchange Commission announced the agenda for the upcoming meeting on January 24, 2020 of its Investor Advisory Committee.  The Committee will hold a telephonic meeting and will consider the SEC’s proxy voting advice and Rule 14a-8 proposed rulemakings, as well as market structure issues related to rebate tier disclosure.  For information on joining the meeting, click here.  The agenda can be found here.

Recently, the SEC’s Office of the Investor Advocate released its report on its fiscal 2019 activities.  The report cites staffing challenges that have impaired the ability of the SEC’s Ombudsmen to respond to matters brought by investors, which tripled in number during the fiscal year.

The report reviews the Office’s activities in nine areas: public company disclosure, equity market structure, fixed income market reforms, accounting and auditing, standards of conduct for broker-dealers and investment advisers, exchange traded funds, enhanced disclosure for funds and variable annuities, transfer agents, and the impact of Kokesh v. SEC on enforcement actions.

The Office did not object to the various disclosure effectiveness initiative related rulemakings undertaken during the fiscal year.  However, the Office did raise concerns in its comment letter submitted in July 2019 in response to the SEC’s concept release on exempt offerings questioning assumptions implicit in the release that would in the view of the Office erode securities protections for investors were the SEC to adopt measures broadening the ability of retail investors to invest in exempt offerings.  The Office also raises concerns relating to the SEC’s proposal to amend the definition of accelerated filer (and the impact of such a change on the Sarbanes-Oxley Section 404(b) requirement), urging that the SEC conduct additional economic analysis to address criticisms raised during the comment process.

The Report highlights problematic investment products, which include, among others: initial coin offerings, cryptocurrency and blockchain related investments, real estate related investments, social sentiment investing tools, affinity fraud, and variable annuities sales practices.  The Report also comments on risks associated with dual-share class structures and the LIBOR transition.

On November 18, 2019, Securities and Exchange Commission (the “SEC”) Commissioner Robert Jackson sent a letter to Representative Carolyn Maloney attributing the lack of public disclosure regarding the political spending habits of public companies to the influence of institutional investors. Commissioner Jackson publicly supported imposing corporate political spending disclosure requirements on public companies prior to his joining the SEC in 2018. In the letter, Commissioner Jackson noted that institutional investors, which vote large blocks of public company securities, tend to vote against shareholder proposals that would require disclosure of a public company’s political spending practices. Institutional investors provide little explanation of their voting decisions or their voting track record on corporate political spending shareholder proposals to investors or the general public. Commissioner Jackson raised the concern that if investors do not understand how institutional investors vote on shareholder proposals that would require disclosure of corporate political spending then they will be unable to insist upon transparency and accountability. As a result, the letter advocates for legislation that would require public companies to disclose whether and how they spend money received from shareholders on politics. Commissioner Jackson’s term with the SEC expired in June and he is expected to leave the SEC in 2020. A copy of Commissioner Jackson’s letter can be found here.