Broad Coalition Urges SEC To Reject NYSE Proposal Allowing Newly Listed Companies to Go Five Years Without Internal Audit

LAKE MARY, Fla., Sept. 8, 2026 /PRNewswire/ -- The Institute of Internal Auditors (The IIA), joined by a coalition of leading investor, governance, and professional organizations, has opposed a New York Stock Exchange proposal to roll back a key investor protection at newly listed companies.

In formal comment letters filed with the U.S. Securities and Exchange Commission, the groups urged the Commission to reject the proposal, which would allow newly listed companies to take up to five years, up from the current one-year transition period, to establish an internal audit function. Organizations signing the coalition letter include Better Markets, the Interfaith Center on Corporate Responsibility, RIMS, the National Whistleblower Center, the Association of Certified Fraud Examiners, Public Citizen, and Americans for Financial Reform Education Fund. Over 80 individual practitioners, executives, and investors submitted comments of their own.

The internal audit listing requirement was adopted as part of the NYSE's post-Enron governance reforms and has provided an important safeguard for investors in newly listed companies for more than two decades. The Exchange's filing proposes to extend the transition period fivefold while offering no data: no count of affected companies, no measurement of the claimed burden, no analysis of any estimated savings, and no analysis of the consequences for investors.

"Five years is far too long for a public company to operate without the ongoing, objective assurance an internal audit function provides," said Anthony J. Pugliese, President and CEO of The IIA. "The Exchange has offered no evidence for this change, and the protections it points to do not apply to most of these companies. This requirement has served investors well for more than two decades, and it has been relaxed once already. Extending it fivefold would be a significant step backward for good governance."

The coalition's letter argues that the requirement is a basic protection investors count on from the earliest days of a company's public life and that independent assurance over a newly public company's risks and internal controls is foundational. The IIA's position is consistent with the objection it filed when the current one-year transition period was adopted in 2013. The IIA has said it stands ready to work with the Exchange and the Commission on any path supported by evidence and broad stakeholder input.

Separately, The IIA filed its own formal comment letter with the SEC and argues that the safeguards cited in the Exchange's own filing do not fill the gap. Chief among them is the Sarbanes-Oxley auditor attestation requirement, from which most newly public companies are already exempt for up to five years following their initial public offering, and which a separate pending SEC proposal would remove for every newly public company. Under the NYSE proposal, a typical new issuer could trade for five years with no internal audit function and no independent attestation over its internal controls, during precisely the years its systems and controls are being built. Read The IIA's comment letter and the coalition letter.

About The Institute of Internal Auditors
The Institute of Internal Auditors (The IIA) is an international professional association that serves more than 265,000 global members and has awarded more than 220,000 Certified Internal Auditor® certifications worldwide. Established in 1941, The IIA is recognized throughout the world as the internal audit profession's leader in standards, certifications, education, research, and technical guidance. For more information, visit theiia.org.

SOURCE The Institute of Internal Auditors