Definition
In AICPA literature, a nonissuer is an entity that is not an issuer. Under the Sarbanes-Oxley Act, an issuer is a company whose securities are registered under section 12 of the Securities Exchange Act, that must file reports under section 15(d), or that has filed a registration statement under the Securities Act that has not yet become effective or been withdrawn. Most private companies, nonprofits, governments and benefit plans are nonissuers. Their audits follow the AICPA's Statements on Auditing Standards, codified as AU-C, while PCAOB standards govern audits of issuers and, by statute, broker-dealers.
Why it matters in an audit or review
The label sets which standards, independence rules, inspection regime and report form apply. A nonissuer that plans to go public may need a later reaudit under PCAOB standards, so firms ask about it at acceptance.
Example
Illustrative: a privately held manufacturer files no reports with the SEC, so its auditor follows AU-C and AICPA independence rules. If it files a registration statement for an initial public offering, a PCAOB-registered firm must audit under PCAOB standards for the periods in the filing.
Common mistakes
- Citing PCAOB rules for a private company engagement.
- Assuming a company that is public in name is always an issuer.
Sources
- Sarbanes-Oxley Act of 2002, section 2(a)(7), 15 U.S.C. 7201(7): https://www.law.cornell.edu/uscode/text/15/7201
- Dodd-Frank Act, section 982 (PCAOB oversight of broker-dealer audits)
- AICPA, AU-C section 200 and the preface to the AICPA Professional Standards
Definitions paraphrase AICPA and FASB guidance; read the standard itself before relying on a requirement. Example figures are illustrative. This page is guidance, not professional advice. Report an error