SEC's small business initiatives supported - with modifications.

The Securities and Exchange Commission's efforts to simplify disclosure requirements for small businesses, especially initial public offerings (IPOs) and offerings exempt from registration, have received qualified support from the SEC regulations committee of the American Institute of CPAs.

In a letter to the SEC, the committee supported the proposed small business initiatives (set forth in SEC release no. 33-6924), while offering several modifications.

The following are among the actions the committee recommended to the SEC to ensure the proposed rules do not diminish the protection investors receive from independent audits of financial information:

* Conduct a cost-benefit analysis to determine whether two years of comparative audited balance sheets should be presented in IPO filings. In addition, regulation S-B should require post-IPO filings to include audited financial statements for the same number of periods currently required by regulation S-X.

* Define the term "small business issuer" in regulation S-B as a company with annual average market capitalization that does not exceed a specified amount for the preceding fiscal year.

* Adopt uniform management discussion and analysis reporting formats under regulations S-B, A and S-K.

* Establish a certain dollar threshold above which audited financial statements should be required in regulation A filings.

* Simplify reporting requirements for limited offerings to be met by small business issuers that wish to raise additional capital subsequent to an IPO.

* Take steps to ease Securities Exchange Act registration for regulation A issuers.

* Clarify applicability of staff accounting bulletins, financial reporting requirements and regulation S-X reporting requirements.