Audit Considerations for JOBS Act Offerings
Raising capital is a complex process and can seem overwhelming. The Jumpstart Our Business Startups (JOBS) Act has substantially changed a number of laws and regulations to make it easier for companies to go public and facilitate the public offering process while also making it easier for companies to privately raise capital and stay private longer. New options include exemptions for crowdfunding, a more useful version of Regulation A, generally solicited Regulation D Rule 506 offerings and an easier path to registration of an initial public offering for emerging growth companies.
This article looks at new options available and highlights the importance of discussions with auditors early in the process to work toward compliance with various audit independence rules and accounting standards. Failure to comply with these rules can have several negative outcomes, from limiting an entity’s choice of auditors to delaying or preventing a company from obtaining needed capital. There is no allowance in U.S. Security and Exchange Commission rules to consider mitigating factors, such as insignificance or immateriality, in these situations. Early collaboration with auditors can help organizations avoid unnecessary costs, time and effort.