When a private client says it plans to register securities with the SEC, the CPA firm is no longer one adviser among several. The audit report goes into a public document, and a set of rules that did not touch the firm before now shapes the engagement. This checklist walks through the sequence from the first conversation to the first periodic report, and says for each step who owns it and where the firm's file shows it. Each rule is covered in more detail in a linked guide.
Step 1: Decide whether the firm can do the work at all
Under Sarbanes-Oxley Section 102, it is unlawful for any person that is not a registered public accounting firm to prepare or issue an audit report for an issuer, or to participate in doing so. A firm that is not registered cannot accept the engagement, and the statute gives the Board 45 days from receipt of a complete application to approve it, unless it first disapproves in writing or asks for more information. Start here, before any fee discussion. See PCAOB registration for CPA firms.
Independence is the second gate. The client becomes an issuer, and the firm's relationships, services and fees are judged under the SEC's independence rule. See SEC Rule 2-01 prohibited nonaudit services and partner rotation and the independence standards page. Any service the firm provides the client, such as preparing statements or bookkeeping, needs to be tested before the engagement letter is signed. The test is not limited to today: under Rule 2-01(f)(5)(iii), the period that counts for a first-time filer reaches back to the first day of the last fiscal year before the issuer first filed, or was required to file, a registration statement or report with the SEC.
Owner: the firm. File evidence: registration confirmation, independence determination, engagement letter.
Step 2: Understand what registration triggers
The SEC's guidance for small businesses distinguishes two routes. A company that wants to raise capital through a registered public offering files a registration statement and may not sell the covered securities until SEC staff declares it effective. A company can also become a reporting company by registering a class of securities under Section 12 of the Exchange Act without selling securities in a registered offering. The staff states that a company may have to register if it has more than $10 million in total assets and a class of equity securities held of record by 2,000 or more persons, or 500 or more persons who are not accredited investors. Listing on a U.S. exchange also triggers registration.
Once a company is reporting, it files annual and quarterly reports and current reports, its CEO and CFO certify financial and certain other information in the periodic reports, and every filing goes through EDGAR and becomes public as soon as it is filed. The firm should tell the client plainly, at the start, that the audit report and the financial statements will be public.
Owner: the client, with its securities counsel. The firm informs.
Step 3: Map the financial statements
Form S-1 Item 11(e) calls for financial statements meeting Regulation S-X. Rule 3-02 requires three fiscal years of comprehensive income and cash flows, or the shorter period of existence. An emerging growth company may present two years in an IPO registration statement. A smaller reporting company follows Rule 8-02: two fiscal years of audited income, cash flows and equity, and balance sheets at the two year-ends. Interim statements may be unaudited. Build the one-page period map before fieldwork. See S-1 financial statement requirements for first-time registrants and age of financial statements under Regulation S-X.
Check eligibility for the scaled paths early. See smaller reporting company and emerging growth company definitions.
Owner: the firm builds the map, management confirms. File evidence: period map, opening balance work for any period the firm did not audit.
Step 4: Settle the auditor history
Item 11(i) of Form S-1 sends the registrant to Item 304 of Regulation S-K. If the company changed auditors in the last two fiscal years or the later interim period, the former auditor's letter and the disclosure of disagreements and reportable events become part of the filing. See Form 8-K Items 4.01 and 4.02. The successor firm should also review its pre-engagement conversations, since written technical views may need to be disclosed.
Owner: the client for disclosure, both firms for the letter.
Step 5: Plan for structured data
The financial statements, footnotes and cover page are tagged in Inline XBRL. Each note and policy is block tagged, each amount in a note is detail tagged, and custom elements are allowed only when no standard element fits. Agree early on who tags, who reviews and when the final statements must be locked. See Inline XBRL tagging review for small filers.
Owner: the client. The firm's role is set by the engagement letter.
Step 6: Expect SEC review
The Division of Corporation Finance reviews filings selectively, and staff may issue comments asking for supplemental information, revised disclosure or additional disclosure. Comment letters and company responses are made public on EDGAR no sooner than 20 business days after the review is completed or the registration statement is declared effective. Everything the company says about its accounting is public. See SEC comment letters: the response process.
For a registration statement, once comments are resolved, the company asks the Commission to declare the statement effective.
Owner: the client, with firm support on accounting responses.
Step 7: Prepare for the first periodic reports
After effectiveness, the company files Form 10-K and Form 10-Q, and Form 8-K for specified events, most of them due within four business days. The 8-K triggers include auditor changes, material agreements and acquisitions. Interim financial statements in the Form 10-Q must be reviewed by an independent public accountant before filing. See Form 10-Q interim review under Rule 10-01(d) and the Form 10-K disclosure checklist.
Owner: the client files; the firm reviews each quarter.
A worked timeline
Oakmoor Biologics, a private company with an auditor of five years, tells its audit partner in the spring that it plans a Form S-1 filing in the fall. The firm is not PCAOB registered.
| Step | Action |
|---|---|
| Week 1 | Partner flags registration, independence and the fee implications. The firm files its PCAOB application. |
| Weeks 2 to 3 | Independence review finds the firm prepared the client's quarterly financial statements until the client hired a controller two fiscal years ago, before the first day of the last fiscal year before the planned filing. The firm documents that it has provided no bookkeeping or statement preparation since, that the earlier service falls outside the Rule 2-01(f)(5)(iii) period, and that it met the AICPA independence rules for those earlier years. Had the service run into that period, stopping now would not cure it. |
| Week 6 | Application approved inside 45 days. Engagement letter reissued for an issuer audit. |
| Weeks 7 to 10 | Period map built. The company expects emerging growth company status and two years of audited statements. Prior-year audits were performed under private-company standards, so the firm compares them with what the filing requires and closes any gap before filing. |
| Weeks 11 to 14 | Tagging calendar agreed, with the statements locked two weeks before filing. |
| Filing | Comment letter arrives. Accounting responses are reviewed by the partner against the file. |
| After effectiveness | First 10-Q review scheduled with the quarter-end close. |
What the firm's file should show at filing
- PCAOB registration confirmation dated before any participation in the issuer audit.
- Independence determination covering services, fees and relationships.
- Period map with rule citations.
- Item 304 support if there was an auditor change.
- Tie-out of tagged data to audited statements, or a record that the engagement excludes it.
- Subsequent events procedures to the filing date.
- Representation letters and audit committee communications. See AU-C 260.
Where CORAA fits
CORAA prepares ready-to-review audit files for US CPA firms, including period maps, comparative schedules and tie-outs. The firm keeps the client, the review and the signature. See /us.
Sources
- SEC, Going Public: https://www.sec.gov/resources-small-businesses/going-public
- SEC, Exchange Act Reporting and Registration: https://www.sec.gov/resources-small-businesses/going-public/exchange-act-reporting-registration
- SEC, Division of Corporation Finance, Filing Review Process: https://www.sec.gov/about/divisions-offices/division-corporation-finance/filing-review-process-corp-fin
- SEC, Form S-1: https://www.sec.gov/files/forms-1.pdf
- Legal Information Institute, 15 U.S.C. 7212: https://www.law.cornell.edu/uscode/text/15/7212
Part of CORAA University · SEC reporting and PCAOB audits: related guides, calculators and templates.
AU-C references are to AICPA Professional Standards, paraphrased here; read the standard itself before relying on a requirement. This page is guidance, not professional advice. Report an error