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1 The Sarbanes-Oxley Act of 2002 largely amended other Acts and the amendatory provisions are not shown, however certain provisions, as amended, do appear elsewhere in this compilation.
SARBANES-OXLEY ACT OF 2002
[Public Law 107–204, Approved July 30, 2002, 116 Stat. 745]
[As Amended Through P. 116–222, Enacted December 18, 2020]
øCurrency: This publication is a compilation of the text of Public Law 107–204. It was last amended by the public law listed in the As Amended Through note above and below at the bottom of each page of the pdf version and reflects current law through the date of the enactment of the public law listed at https:// govinfo/app/collection/comps/¿
øNote: While this publication does not represent an official version of any Federal statute, substantial efforts have been made to ensure the accuracy of its contents. The official version of Federal law is found in the United States Statutes at Large and in the United States Code. The legal effect to be given to the Statutes at Large and the United States Code is established by statute (1 U.S. 112, 204).¿
AN ACT To protect investors by improving the accuracy and reliability of corporate disclosures made pursuant to the securities laws, and for other purposes.
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. ø15 U.S. 7201 note¿ SHORT TITLE; TABLE OF CONTENTS. 1 (a) SHORT TITLE.—This Act may be cited as the ‘‘Sarbanes- Oxley Act of 2002’’. (b) TABLE OF CONTENTS.—The table of contents for this Act is as follows: Sec. 1. Short title; table of contents. Sec. 2. Definitions. Sec. 3. Commission rules and enforcement. TITLE I—PUBLIC COMPANY ACCOUNTING OVERSIGHT BOARD Sec. 101. Establishment; administrative provisions. Sec. 102. Registration with the Board. Sec. 103. Auditing, quality control, and independence standards and rules. Sec. 104. Inspections of registered public accounting firms. Sec. 105. Investigations and disciplinary proceedings. Sec. 106. Foreign public accounting firms. Sec. 107. Commission oversight of the Board. Sec. 108. Accounting standards. Sec. 109. Funding.
TITLE II—AUDITOR INDEPENDENCE Sec. 201. Services outside the scope of practice of auditors. Sec. 202. Preapproval requirements. Sec. 203. Audit partner rotation. Sec. 204. Auditor reports to audit committees. Sec. 205. Conforming amendments. Sec. 206. Conflicts of interest. Sec. 207. Study of mandatory rotation of registered public accounting firms.
December 21, 2020 As Amended Through P. 116-222, Enacted December 18, 2020
Sec. 1 SARBANES-OXLEY ACT OF 2002 2
Sec. 208. Commission authority. Sec. 209. Considerations by appropriate State regulatory authorities.
TITLE III—CORPORATE RESPONSIBILITY Sec. 301. Public company audit committees. Sec. 302. Corporate responsibility for financial reports. Sec. 303. Improper influence on conduct of audits. Sec. 304. Forfeiture of certain bonuses and profits. Sec. 305. Officer and director bars and penalties. Sec. 306. Insider trades during pension fund blackout periods. Sec. 307. Rules of professional responsibility for attorneys. Sec. 308. Fair funds for investors.
TITLE IV—ENHANCED FINANCIAL DISCLOSURES Sec. 401. Disclosures in periodic reports. Sec. 402. Enhanced conflict of interest provisions. Sec. 403. Disclosures of transactions involving management and principal stock- holders. Sec. 404. Management assessment of internal controls. Sec. 405. Exemption. Sec. 406. Code of ethics for senior financial officers. Sec. 407. Disclosure of audit committee financial expert. Sec. 408. Enhanced review of periodic disclosures by issuers. Sec. 409. Real time issuer disclosures.
TITLE V—ANALYST CONFLICTS OF INTEREST Sec. 501. Treatment of securities analysts by registered securities associations and national securities exchanges.
TITLE VI—COMMISSION RESOURCES AND AUTHORITY Sec. 601. Authorization of appropriations. Sec. 602. Appearance and practice before the Commission. Sec. 603. Federal court authority to impose penny stock bars. Sec. 604. Qualifications of associated persons of brokers and dealers.
TITLE VII—STUDIES AND REPORTS Sec. 701. GAO study and report regarding consolidation of public accounting firms. Sec. 702. Commission study and report regarding credit rating agencies. Sec. 703. Study and report on violators and violations Sec. 704. Study of enforcement actions. Sec. 705. Study of investment banks.
TITLE VIII—CORPORATE AND CRIMINAL FRAUD ACCOUNTABILITY Sec. 801. Short title. Sec. 802. Criminal penalties for altering documents. Sec. 803. Debts nondischargeable if incurred in violation of securities fraud laws. Sec. 804. Statute of limitations for securities fraud. Sec. 805. Review of Federal Sentencing Guidelines for obstruction of justice and ex- tensive criminal fraud. Sec. 806. Protection for employees of publicly traded companies who provide evi- dence of fraud. Sec. 807. Criminal penalties for defrauding shareholders of publicly traded compa- nies.
TITLE IX—WHITE-COLLAR CRIME PENALTY ENHANCEMENTS Sec. 901. Short title. Sec. 902. Attempts and conspiracies to commit criminal fraud offenses. Sec. 903. Criminal penalties for mail and wire fraud. Sec. 904. Criminal penalties for violations of the Employee Retirement Income Se- curity Act of 1974. Sec. 905. Amendment to sentencing guidelines relating to certain white-collar of- fenses. Sec. 906. Corporate responsibility for financial reports. December 21, 2020 As Amended Through P. 116-222, Enacted December 18, 2020
Sec. 2 SARBANES-OXLEY ACT OF 2002 4
(7) ISSUER.—The term ‘‘issuer’’ means an issuer (as defined in section 3 of the Securities Exchange Act of 1934 (15 U.S. 78c)), the securities of which are registered under section 12 of that Act (15 U.S. 78l), or that is required to file reports under section 15(d) (15 U.S. 78o(d)), or that files or has filed a registration statement that has not yet become effective under the Securities Act of 1933 (15 U.S. 77a et seq.), and that it has not withdrawn. (8) NON-AUDIT SERVICES.—The term ‘‘non-audit services’’ means any professional services provided to an issuer by a reg- istered public accounting firm, other than those provided to an issuer in connection with an audit or a review of the financial statements of an issuer. (9) PERSON ASSOCIATED WITH A PUBLIC ACCOUNTING FIRM.— (A) I N GENERAL.—The terms ‘‘person associated with a public accounting firm’’ (or with a ‘‘registered public ac- counting firm’’) and ‘‘associated person of a public account- ing firm’’ (or of a ‘‘registered public accounting firm’’) mean any individual proprietor, partner, shareholder, principal, accountant, or other professional employee of a public ac- counting firm, or any other independent contractor or enti- ty that, in connection with the preparation or issuance of any audit report— (i) shares in the profits of, or receives compensa- tion in any other form from, that firm; or (ii) participates as agent or otherwise on behalf of such accounting firm in any activity of that firm. (B) EXEMPTION AUTHORITY.—The Board may, by rule, exempt persons engaged only in ministerial tasks from the definition in subparagraph (A), to the extent that the Board determines that any such exemption is consistent with the purposes of this Act, the public interest, or the protection of investors. (C) INVESTIGATIVE AND ENFORCEMENT AUTHORITY.— For purposes of sections 3(c), 101(c), 105, and 107(c) and the rules of the Board and Commission issued thereunder, except to the extent specifically excepted by such rules, the terms defined in subparagraph (A) shall include any per- son associated, seeking to become associated, or formerly associated with a public accounting firm, except that— (i) the authority to conduct an investigation of such person under section 105(b) shall apply only with respect to any act or practice, or omission to act, by the person while such person was associated or seek- ing to become associated with a registered public ac- counting firm; and (ii) the authority to commence a disciplinary pro- ceeding under section 105(c)(1), or impose sanctions under section 105(c)(4), against such person shall apply only with respect to— (I) conduct occurring while such person was associated or seeking to become associated with a registered public accounting firm; or December 21, 2020 As Amended Through P. 116-222, Enacted December 18, 2020
5 SARBANES-OXLEY ACT OF 2002 Sec. 2
(II) non-cooperation, as described in section 105(b)(3), with respect to a demand in a Board in- vestigation for testimony, documents, or other in- formation relating to a period when such person was associated or seeking to become associated with a registered public accounting firm. (10) PROFESSIONAL STANDARDS.—The term ‘‘professional standards’’ means— (A) accounting principles that are— (i) established by the standard setting body de- scribed in section 19(b) of the Securities Act of 1933, as amended by this Act, or prescribed by the Commis- sion under section 19(a) of that Act (15 U.S. 17a(s)) or section 13(b) of the Securities Exchange Act of 1934 (15 U.S. 78a(m)); and (ii) relevant to audit reports for particular issuers, or dealt with in the quality control system of a par- ticular registered public accounting firm; and (B) auditing standards, standards for attestation en- gagements, quality control policies and procedures, ethical and competency standards, and independence standards (including rules implementing title II) that the Board or the Commission determines— (i) relate to the preparation or issuance of audit reports for issuers; and (ii) are established or adopted by the Board under section 103(a), or are promulgated as rules of the Commission. (11) PUBLIC ACCOUNTING FIRM.—The term ‘‘public account- ing firm’’ means— (A) a proprietorship, partnership, incorporated associa- tion, corporation, limited liability company, limited liabil- ity partnership, or other legal entity that is engaged in the practice of public accounting or preparing or issuing audit reports; and (B) to the extent so designated by the rules of the Board, any associated person of any entity described in subparagraph (A). (12) REGISTERED PUBLIC ACCOUNTING FIRM.—The term ‘‘registered public accounting firm’’ means a public accounting firm registered with the Board in accordance with this Act. (13) RULES OF THE BOARD.—The term ‘‘rules of the Board’’ means the bylaws and rules of the Board (as submitted to, and approved, modified, or amended by the Commission, in accord- ance with section 107), and those stated policies, practices, and interpretations of the Board that the Commission, by rule, may deem to be rules of the Board, as necessary or appropriate in the public interest or for the protection of investors. (14) SECURITY.—The term ‘‘security’’ has the same mean- ing as in section 3(a) of the Securities Exchange Act of 1934 (15 U.S. 78c(a)). (15) SECURITIES LAWS.—The term ‘‘securities laws’’ means the provisions of law referred to in section 3(a)(47) of the Secu- rities Exchange Act of 1934 (15 U.S. 78c(a)(47)), as amended December 21, 2020 As Amended Through P. 116-222, Enacted December 18, 2020
7 SARBANES-OXLEY ACT OF 2002 Sec. 101
TITLE I—PUBLIC COMPANY
ACCOUNTING OVERSIGHT BOARD
SEC. 101. ø15 U.S. 7211¿ ESTABLISHMENT; ADMINISTRATIVE PROVI- SIONS. (a) ESTABLISHMENT OF BOARD.—There is established the Public Company Accounting Oversight Board, to oversee the audit of com- panies that are subject to the securities laws, and related matters, in order to protect the interests of investors and further the public interest in the preparation of informative, accurate, and inde- pendent audit reports. The Board shall be a body corporate, operate as a nonprofit corporation, and have succession until dissolved by an Act of Congress. (b) STATUS.—The Board shall not be an agency or establish- ment of the United States Government, and, except as otherwise provided in this Act, shall be subject to, and have all the powers conferred upon a nonprofit corporation by, the District of Columbia Nonprofit Corporation Act. No member or person employed by, or agent for, the Board shall be deemed to be an officer or employee of or agent for the Federal Government by reason of such service. (c) DUTIES OF THE BOARD.—The Board shall, subject to action by the Commission under section 107, and once a determination is made by the Commission under subsection (d) of this section— (1) register public accounting firms that prepare audit re- ports for issuers, brokers, and dealers, in accordance with sec- tion 102; (2) establish or adopt, or both, by rule, auditing, quality control, ethics, independence, and other standards relating to the preparation of audit reports for issuers, brokers, and deal- ers, in accordance with section 103; (3) conduct inspections of registered public accounting firms, in accordance with section 104 and the rules of the Board; (4) conduct investigations and disciplinary proceedings concerning, and impose appropriate sanctions where justified upon, registered public accounting firms and associated per- sons of such firms, in accordance with section 105; (5) perform such other duties or functions as the Board (or the Commission, by rule or order) determines are necessary or appropriate to promote high professional standards among, and improve the quality of audit services offered by, registered public accounting firms and associated persons thereof, or oth- erwise to carry out this Act, in order to protect investors, or to further the public interest; (6) enforce compliance with this Act, the rules of the Board, professional standards, and the securities laws relating to the preparation and issuance of audit reports and the obliga- tions and liabilities of accountants with respect thereto, by reg- istered public accounting firms and associated persons thereof; and (7) set the budget and manage the operations of the Board and the staff of the Board. December 21, 2020 As Amended Through P. 116-222, Enacted December 18, 2020
Sec. 101 SARBANES-OXLEY ACT OF 2002 8
(d) COMMISSION DETERMINATION.—The members of the Board shall take such action (including hiring of staff, proposal of rules, and adoption of initial and transitional auditing and other profes- sional standards) as may be necessary or appropriate to enable the Commission to determine, not later than 270 days after the date of enactment of this Act, that the Board is so organized and has the capacity to carry out the requirements of this title, and to en- force compliance with this title by registered public accounting firms and associated persons thereof. The Commission shall be re- sponsible, prior to the appointment of the Board, for the planning for the establishment and administrative transition to the Board’s operation. (e) BOARD MEMBERSHIP.— (1) COMPOSITION.—The Board shall have 5 members, ap- pointed from among prominent individuals of integrity and reputation who have a demonstrated commitment to the inter- ests of investors and the public, and an understanding of the responsibilities for and nature of the financial disclosures re- quired of issuers, brokers, and dealers under the securities laws and the obligations of accountants with respect to the preparation and issuance of audit reports with respect to such disclosures. (2) LIMITATION.—Two members, and only 2 members, of the Board shall be or have been certified public accountants pursuant to the laws of 1 or more States, provided that, if 1 of those 2 members is the chairperson, he or she may not have been a practicing certified public accountant for at least 5 years prior to his or her appointment to the Board. (3) FULL-TIME INDEPENDENT SERVICE.—Each member of the Board shall serve on a full-time basis, and may not, con- current with service on the Board, be employed by any other person or engage in any other professional or business activity. No member of the Board may share in any of the profits of, or receive payments from, a public accounting firm (or any other person, as determined by rule of the Commission), other than fixed continuing payments, subject to such conditions as the Commission may impose, under standard arrangements for the retirement of members of public accounting firms. (4) APPOINTMENT OF BOARD MEMBERS.— (A) INITIAL BOARD.—Not later than 90 days after the date of enactment of this Act, the Commission, after con- sultation with the Chairman of the Board of Governors of the Federal Reserve System and the Secretary of the Treasury, shall appoint the chairperson and other initial members of the Board, and shall designate a term of serv- ice for each. (B) VACANCIES.—A vacancy on the Board shall not af- fect the powers of the Board, but shall be filled in the same manner as provided for appointments under this sec- tion. (5) TERM OF SERVICE.— (A) IN GENERAL.—The term of service of each Board member shall be 5 years, and until a successor is ap- pointed, except that— December 21, 2020 As Amended Through P. 116-222, Enacted December 18, 2020
Sec. 102 SARBANES-OXLEY ACT OF 2002 10
dividual member or employee of the Board, or to a division of the Board, including functions with respect to hearing, deter- mining, ordering, certifying, reporting, or otherwise acting as to any matter, except that— (A) the Board shall retain a discretionary right to re- view any action pursuant to any such delegated function, upon its own motion; (B) a person shall be entitled to a review by the Board with respect to any matter so delegated, and the decision of the Board upon such review shall be deemed to be the action of the Board for all purposes (including appeal or re- view thereof); and (C) if the right to exercise a review described in sub- paragraph (A) is declined, or if no such review is sought within the time stated in the rules of the Board, then the action taken by the holder of such delegation shall for all purposes, including appeal or review thereof, be deemed to be the action of the Board; (3) establish ethics rules and standards of conduct for Board members and staff, including a bar on practice before the Board (and the Commission, with respect to Board-related matters) of 1 year for former members of the Board, and appro- priate periods (not to exceed 1 year) for former staff of the Board; and (4) provide as otherwise required by this Act. (h) ANNUAL REPORT TO THE COMMISSION.—The Board shall submit an annual report (including its audited financial state- ments) to the Commission, and the Commission shall transmit a copy of that report to the Committee on Banking, Housing, and Urban Affairs of the Senate, and the Committee on Financial Serv- ices of the House of Representatives, not later than 30 days after the date of receipt of that report by the Commission. SEC. 102. ø15 U.S. 7212¿ REGISTRATION WITH THE BOARD. (a) MANDATORY REGISTRATION.—It shall be unlawful for any person that is not a registered public accounting firm to prepare or issue, or to participate in the preparation or issuance of, any audit report with respect to any issuer, broker, or dealer. (b) APPLICATIONS FOR REGISTRATION.— (1) FORM OF APPLICATION.—A public accounting firm shall use such form as the Board may prescribe, by rule, to apply for registration under this section. (2) CONTENTS OF APPLICATIONS.—Each public accounting firm shall submit, as part of its application for registration, in such detail as the Board shall specify— (A) the names of all issuers, brokers, and dealers for which the firm prepared or issued audit reports during the immediately preceding calendar year, and for which the firm expects to prepare or issue audit reports during the current calendar year; (B) the annual fees received by the firm from each such issuer, broker, or dealer for audit services, other ac- counting services, and non-audit services, respectively; December 21, 2020 As Amended Through P. 116-222, Enacted December 18, 2020
11 SARBANES-OXLEY ACT OF 2002 Sec. 102
(C) such other current financial information for the most recently completed fiscal year of the firm as the Board may reasonably request; (D) a statement of the quality control policies of the firm for its accounting and auditing practices; (E) a list of all accountants associated with the firm who participate in or contribute to the preparation of audit reports, stating the license or certification number of each such person, as well as the State license numbers of the firm itself; (F) information relating to criminal, civil, or adminis- trative actions or disciplinary proceedings pending against the firm or any associated person of the firm in connection with any audit report; (G) copies of any periodic or annual disclosure filed by an issuer, broker, or dealer with the Commission during the immediately preceding calendar year which discloses accounting disagreements between such issuer, broker, or dealer and the firm in connection with an audit report fur- nished or prepared by the firm for such issuer, broker, or dealer; and (H) such other information as the rules of the Board or the Commission shall specify as necessary or appro- priate in the public interest or for the protection of inves- tors. (3) CONSENTS.—Each application for registration under this subsection shall include— (A) a consent executed by the public accounting firm to cooperation in and compliance with any request for tes- timony or the production of documents made by the Board in the furtherance of its authority and responsibilities under this title (and an agreement to secure and enforce similar consents from each of the associated persons of the public accounting firm as a condition of their continued employment by or other association with such firm); and (B) a statement that such firm understands and agrees that cooperation and compliance, as described in the consent required by subparagraph (A), and the secur- ing and enforcement of such consents from its associated persons, in accordance with the rules of the Board, shall be a condition to the continuing effectiveness of the reg- istration of the firm with the Board. (c) ACTION ON APPLICATIONS.— (1) TIMING.—The Board shall approve a completed applica- tion for registration not later than 45 days after the date of re- ceipt of the application, in accordance with the rules of the Board, unless the Board, prior to such date, issues a written notice of disapproval to, or requests more information from, the prospective registrant. (2) TREATMENT.—A written notice of disapproval of a com- pleted application under paragraph (1) for registration shall be treated as a disciplinary sanction for purposes of sections 105(d) and 107(c). December 21, 2020 As Amended Through P. 116-222, Enacted December 18, 2020
13 SARBANES-OXLEY ACT OF 2002 Sec. 103
(iii) in each audit report for an issuer, describe the scope of the auditor’s testing of the internal control structure and procedures of the issuer, required by section 404(b), and present (in such report or in a sep- arate report)— (I) the findings of the auditor from such test- ing; (II) an evaluation of whether such internal control structure and procedures— (aa) include maintenance of records that in reasonable detail accurately and fairly re- flect the transactions and dispositions of the assets of the issuer; (bb) provide reasonable assurance that transactions are recorded as necessary to per- mit preparation of financial statements in ac- cordance with generally accepted accounting principles, and that receipts and expenditures of the issuer are being made only in accord- ance with authorizations of management and directors of the issuer; and (III) a description, at a minimum, of material weaknesses in such internal controls, and of any material noncompliance found on the basis of such testing. (B) shall include, in the quality control standards that it adopts with respect to the issuance of audit reports, re- quirements for every registered public accounting firm re- lating to— (i) monitoring of professional ethics and independ- ence from issuers, brokers, and dealers on behalf of which the firm issues audit reports; (ii) consultation within such firm on accounting and auditing questions; (iii) supervision of audit work; (iv) hiring, professional development, and ad- vancement of personnel; (v) the acceptance and continuation of engage- ments; (vi) internal inspection; and (vii) such other requirements as the Board may prescribe, subject to subsection (a)(1). (3) AUTHORITY TO ADOPT OTHER STANDARDS.— (A) IN GENERAL.—In carrying out this subsection, the Board— (i) may adopt as its rules, subject to the terms of
section 107, any portion of any statement of auditing standards or other professional standards that the Board determines satisfy the requirements of para- graph (1), and that were proposed by 1 or more profes- sional groups of accountants that shall be designated or recognized by the Board, by rule, for such purpose, pursuant to this paragraph or 1 or more advisory groups convened pursuant to paragraph (4); and December 21, 2020 As Amended Through P. 116-222, Enacted December 18, 2020
Sec. 103 SARBANES-OXLEY ACT OF 2002 14
(ii) notwithstanding clause (i), shall retain full au- thority to modify, supplement, revise, or subsequently amend, modify, or repeal, in whole or in part, any por- tion of any statement described in clause (i). (B) INITIAL AND TRANSITIONAL STANDARDS.—The Board shall adopt standards described in subparagraph (A)(i) as initial or transitional standards, to the extent the Board determines necessary, prior to a determination of the Com- mission under section 101(d), and such standards shall be separately approved by the Commission at the time of that determination, without regard to the procedures required by section 107 that otherwise would apply to the approval of rules of the Board. (C) TRANSITION PERIOD FOR EMERGING GROWTH COMPA- NIES.—Any rules of the Board requiring mandatory audit firm rotation or a supplement to the auditor’s report in which the auditor would be required to provide additional information about the audit and the financial statements of the issuer (auditor discussion and analysis) shall not apply to an audit of an emerging growth company, as de- fined in section 3 of the Securities Exchange Act of 1934. Any additional rules adopted by the Board after the date of enactment of this subparagraph shall not apply to an audit of any emerging growth company, unless the Com- mission determines that the application of such additional requirements is necessary or appropriate in the public in- terest, after considering the protection of investors and whether the action will promote efficiency, competition, and capital formation. (4) ADVISORY GROUPS.—The Board shall convene, or au- thorize its staff to convene, such expert advisory groups as may be appropriate, which may include practicing accountants and other experts, as well as representatives of other interested groups, subject to such rules as the Board may prescribe to prevent conflicts of interest, to make recommendations con- cerning the content (including proposed drafts) of auditing, quality control, ethics, independence, or other standards re- quired to be established under this section. (b) INDEPENDENCE STANDARDS AND RULES.—The Board shall establish such rules as may be necessary or appropriate in the pub- lic interest or for the protection of investors, to implement, or as authorized under, title II of this Act. (c) COOPERATION WITH DESIGNATED PROFESSIONAL GROUPS OF ACCOUNTANTS AND ADVISORY GROUPS.— (1) IN GENERAL.—The Board shall cooperate on an ongoing basis with professional groups of accountants designated under subsection (a)(3)(A) and advisory groups convened under sub- section (a)(4) in the examination of the need for changes in any standards subject to its authority under subsection (a), rec- ommend issues for inclusion on the agendas of such designated professional groups of accountants or advisory groups, and take such other steps as it deems appropriate to increase the effectiveness of the standard setting process. December 21, 2020 As Amended Through P. 116-222, Enacted December 18, 2020
Sec. 104 SARBANES-OXLEY ACT OF 2002 16
(A) annually with respect to each registered public ac- counting firm that regularly provides audit reports for more than 100 issuers; and (B) not less frequently than once every 3 years with respect to each registered public accounting firm that regu- larly provides audit reports for 100 or fewer issuers. (2) ADJUSTMENTS TO SCHEDULES.—The Board may, by rule, adjust the inspection schedules set under paragraph (1) if the Board finds that different inspection schedules are consistent with the purposes of this Act, the public interest, and the pro- tection of investors. The Board may conduct special inspections at the request of the Commission or upon its own motion. (c) PROCEDURES.—The Board shall, in each inspection under this section, and in accordance with its rules for such inspections— (1) identify any act or practice or omission to act by the registered public accounting firm, or by any associated person thereof, revealed by such inspection that may be in violation of this Act, the rules of the Board, the rules of the Commission, the firm’s own quality control policies, or professional stand- ards; (2) report any such act, practice, or omission, if appro- priate, to the Commission and each appropriate State regu- latory authority; and (3) begin a formal investigation or take disciplinary action, if appropriate, with respect to any such violation, in accordance with this Act and the rules of the Board. (d) CONDUCT OF INSPECTIONS.—In conducting an inspection of a registered public accounting firm under this section, the Board shall— (1) inspect and review selected audit and review engage- ments of the firm (which may include audit engagements that are the subject of ongoing litigation or other controversy be- tween the firm and 1 or more third parties), performed at var- ious offices and by various associated persons of the firm, as selected by the Board; (2) evaluate the sufficiency of the quality control system of the firm, and the manner of the documentation and commu- nication of that system by the firm; and (3) perform such other testing of the audit, supervisory, and quality control procedures of the firm as are necessary or appropriate in light of the purpose of the inspection and the re- sponsibilities of the Board. (e) RECORD RETENTION.—The rules of the Board may require the retention by registered public accounting firms for inspection purposes of records whose retention is not otherwise required by section 103 or the rules issued thereunder. (f) PROCEDURES FOR REVIEW.—The rules of the Board shall provide a procedure for the review of and response to a draft in- spection report by the registered public accounting firm under in- spection. The Board shall take such action with respect to such re- sponse as it considers appropriate (including revising the draft re- port or continuing or supplementing its inspection activities before issuing a final report), but the text of any such response, appro- priately redacted to protect information reasonably identified by December 21, 2020 As Amended Through P. 116-222, Enacted December 18, 2020
17 SARBANES-OXLEY ACT OF 2002 Sec. 104
the accounting firm as confidential, shall be attached to and made part of the inspection report. (g) REPORT.—A written report of the findings of the Board for each inspection under this section, subject to subsection (h), shall be— (1) transmitted, in appropriate detail, to the Commission and each appropriate State regulatory authority, accompanied by any letter or comments by the Board or the inspector, and any letter of response from the registered public accounting firm; and (2) made available in appropriate detail to the public (sub- ject to section 105(b)(5)(A), and to the protection of such con- fidential and proprietary information as the Board may deter- mine to be appropriate, or as may be required by law), except that no portions of the inspection report that deal with criti- cisms of or potential defects in the quality control systems of the firm under inspection shall be made public if those criti- cisms or defects are addressed by the firm, to the satisfaction of the Board, not later than 12 months after the date of the inspection report. (h) INTERIM COMMISSION REVIEW.— (1) REVIEWABLE MATTERS.—A registered public accounting firm may seek review by the Commission, pursuant to such rules as the Commission shall promulgate, if the firm— (A) has provided the Board with a response, pursuant to rules issued by the Board under subsection (f), to the substance of particular items in a draft inspection report, and disagrees with the assessments contained in any final report prepared by the Board following such response; or (B) disagrees with the determination of the Board that criticisms or defects identified in an inspection report have not been addressed to the satisfaction of the Board within 12 months of the date of the inspection report, for pur- poses of subsection (g)(2). (2) TREATMENT OF REVIEW.—Any decision of the Commis- sion with respect to a review under paragraph (1) shall not be reviewable under section 25 of the Securities Exchange Act of 1934 (15 U.S. 78y), or deemed to be ‘‘final agency action’’ for purposes of section 704 of title 5, United States Code. (3) TIMING.—Review under paragraph (1) may be sought during the 30-day period following the date of the event giving rise to the review under subparagraph (A) or (B) of paragraph (1). (i) DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PRE- VENT INSPECTIONS.— (1) DEFINITIONS.—In this subsection— (A) the term ‘‘covered issuer’’ means an issuer that is required to file reports under section 13 or 15(d) of the Se- curities Exchange Act of 1934 (15 U.S. 78m, 78o(d)); and (B) the term ‘‘non-inspection year’’ means, with respect to a covered issuer, a year— (i) during which the Commission identifies the covered issuer under paragraph (2)(A) with respect to December 21, 2020 As Amended Through P. 116-222, Enacted December 18, 2020
19 SARBANES-OXLEY ACT OF 2002 Sec. 105
(D) REMOVAL OF SUBSEQUENT PROHIBITION.—If, after the end of the 5-year period beginning on the date on which the Commission imposes a prohibition on a covered issuer under subparagraph (C), the covered issuer certifies to the Commission that the covered issuer will retain a registered public accounting firm that the Board is able to inspect under this section, the Commission shall end that prohibition. (4) RULES.—Not later than 90 days after the date of enact- ment of this subsection, the Commission shall issue rules that establish the manner and form in which a covered issuer shall make a submission required under paragraph (2)(B). SEC. 105. ø15 U.S. 7215¿ INVESTIGATIONS AND DISCIPLINARY PRO- CEEDINGS. (a) IN GENERAL.—The Board shall establish, by rule, subject to the requirements of this section, fair procedures for the investiga- tion and disciplining of registered public accounting firms and asso- ciated persons of such firms. (b) INVESTIGATIONS.— (1) AUTHORITY.—In accordance with the rules of the Board, the Board may conduct an investigation of any act or practice, or omission to act, by a registered public accounting firm, any associated person of such firm, or both, that may violate any provision of this Act, the rules of the Board, the provisions of the securities laws relating to the preparation and issuance of audit reports and the obligations and liabilities of accountants with respect thereto, including the rules of the Commission issued under this Act, or professional standards, regardless of how the act, practice, or omission is brought to the attention of the Board. (2) TESTIMONY AND DOCUMENT PRODUCTION.—In addition to such other actions as the Board determines to be necessary or appropriate, the rules of the Board may— (A) require the testimony of the firm or of any person associated with a registered public accounting firm, with respect to any matter that the Board considers relevant or material to an investigation; (B) require the production of audit work papers and any other document or information in the possession of a registered public accounting firm or any associated person thereof, wherever domiciled, that the Board considers rel- evant or material to the investigation, and may inspect the books and records of such firm or associated person to verify the accuracy of any documents or information sup- plied; (C) request the testimony of, and production of any document in the possession of, any other person, including any client of a registered public accounting firm that the Board considers relevant or material to an investigation under this section, with appropriate notice, subject to the needs of the investigation, as permitted under the rules of the Board; and (D) provide for procedures to seek issuance by the Commission, in a manner established by the Commission, December 21, 2020 As Amended Through P. 116-222, Enacted December 18, 2020
Sec. 105 SARBANES-OXLEY ACT OF 2002 20
of a subpoena to require the testimony of, and production of any document in the possession of, any person, includ- ing any client of a registered public accounting firm, that the Board considers relevant or material to an investiga- tion under this section. (3) NONCOOPERATION WITH INVESTIGATIONS.— (A) IN GENERAL.—If a registered public accounting firm or any associated person thereof refuses to testify, produce documents, or otherwise cooperate with the Board in connection with an investigation under this section, the Board may— (i) suspend or bar such person from being associ- ated with a registered public accounting firm, or re- quire the registered public accounting firm to end such association; (ii) suspend or revoke the registration of the pub- lic accounting firm; and (iii) invoke such other lesser sanctions as the Board considers appropriate, and as specified by rule of the Board. (B) PROCEDURE.—Any action taken by the Board under this paragraph shall be subject to the terms of sec- tion 107(c). (4) COORDINATION AND REFERRAL OF INVESTIGATIONS.— (A) COORDINATION.—The Board shall notify the Com- mission of any pending Board investigation involving a po- tential violation of the securities laws, and thereafter co- ordinate its work with the work of the Commission’s Divi- sion of Enforcement, as necessary to protect an ongoing Commission investigation. (B) REFERRAL.—The Board may refer an investigation under this section— (i) to the Commission; (ii) to a self-regulatory organization, in the case of an investigation that concerns an audit report for a broker or dealer that is under the jurisdiction of such self-regulatory organization; (iii) to any other Federal functional regulator (as defined in section 509 of the Gramm-Leach-Bliley Act (15 U.S. 6809)), in the case of an investigation that concerns an audit report for an institution that is sub- ject to the jurisdiction of such regulator; and (iv) at the direction of the Commission, to— (I) the Attorney General of the United States; (II) the attorney general of 1 or more States; and (III) the appropriate State regulatory author-
ity. (5) USE OF DOCUMENTS.— (A) CONFIDENTIALITY.—Except as provided in subpara- graphs (B) and (C), all documents and information pre- pared or received by or specifically for the Board, and de- liberations of the Board and its employees and agents, in connection with an inspection under section 104 or with an December 21, 2020 As Amended Through P. 116-222, Enacted December 18, 2020
Sarbanes Oxley Act - Notes for course BSA
Course: Business tax (BSAC 242)
University: The Philippine Women's University
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