H.R. 2608, a bill to amend the Federal securities laws to specify the periods for which financial statements are required to be provided by an emerging growth company, and for other purposes

H.R. 2608 would change the reporting period for financial statements submitted to the Securities and Exchange Commission (SEC) by an emerging growth company (EGC) or former EGC when it acquires another company. The bill would ensure that EGCs and former EGCs submit financial statements for their target companies that cover a reporting period that does not exceed the earliest audited period for the EGC or former EGC, as presented in connection with an initial public offering. Under current law, when reporting to the SEC, acquiring companies (including EGCs) must submit up to two years of financial statements for their target companies.

Using information about the cost of similar provisions, CBO estimates that it would cost the SEC an insignificant amount to issue rules to implement the bill. However, because the commission is authorized to collect fees each year to offset its annual appropriation, CBO expects that the net effect on discretionary spending over the 2023-2028 period would be negligible, assuming appropriation actions consistent with that authority.

If the SEC increases fees to offset the costs associated with implementing the bill, H.R. 2608 would increase the cost of an existing mandate on private entities required to pay those assessments. CBO estimates that the incremental cost of that mandate would be small and fall below the annual threshold established in the Unfunded Mandates Reform Act (UMRA) for private-sector mandates ($198 million in 2023, adjusted annually for inflation).

H.R. 2608 contains no intergovernmental mandates as defined in UMRA.