Comments of the Auditing Standards Committee of the Auditing Section of the American Accounting Association on NYSE Proposed Rule Change to Amend Sections 303A.00 and 303A.07 of the NYSE Listed Company Manual (Release No. 34-106128; File No. SR-NYSE-
Travis Holt, John D. Keyser, Stephani Mason, Michelle McAllister, Xinning Xiao, Aleksandra B. ZimmermanSUMMARY
On August 13, 2026, the Securities and Exchange Commission (SEC or the Commission) published notice of a proposed rule change filed by the New York Stock Exchange (NYSE or the Exchange) that would extend, from one year to five years, the transition period within which a newly listed company must establish an internal audit function under Sections 303A.00 and 303A.07 of the NYSE Listed Company Manual (SEC 2026). This commentary summarizes the views of the participating members of the Auditing Standards Committee of the Auditing Section of the American Accounting Association. On the basis of extensive empirical literature in auditing, corporate governance, and capital markets, the Committee opposes the proposed rule change. The Exchange has failed to meet its burden of demonstrating that the proposed five-year deferral is designed to protect investors and the public interest, as required by Section 6(b)(5) of the Securities Exchange Act of 1934.