On August 22, 2013, the SEC approved an NYSE proposal to amend Section 303A.00 of its Listed Company Manual to provide a one-year transition period for compliance with the internal audit requirement of Section 303A.07(c). The transition period will be available to companies that are listing at the time of:

Companies subject to Section 303A.07 must have an internal audit function to provide management and the audit committee with ongoing assessments of the company's risk management processes and internal control system. Under the current Section 303A.00, any company listing on the NYSE after transferring from another exchange that does not have an internal audit requirement (such as NASDAQ or NYSE MKT) has one year from the date of listing to comply with the NYSE's internal audit requirement. The SEC's approval notice extends the same transition period to other newly listed companies.

The approval notice notes that newly listed companies often appoint a completely new audit committee. The transition period will give a newly appointed audit committee an opportunity to familiarize itself with the company's internal controls and risk management and determine what kind of internal audit function is suitable for the company.

The SEC's approval notice also approves amendments to certain provisions of Section 303A.07 that set the duties of the audit committee regarding the internal audit function. The amendments apply to a listed company that does not yet have an internal audit function because it is relying on the transition period. The provisions clarify the duties of the audit committee during the transition period by requiring that, among other things:

Section 303A.07 is also being amended to make explicit that all listed companies need an internal audit function in place no later than the first anniversary of the company's listing date.

To learn more about NYSE corporate governance standards, see Comparative Corporate Governance Standards Chart: NYSE vs. NASDAQ.