TITLE I - PUBLIC COMPANY ACCOUNTING OVERSIGHT BOARD
SEC. 101. ESTABLISHMENT; ADMINISTRATIVE PROVISIONS.
(a) ESTABLISHMENT OF BOARD. - There is established
the Public Company Accounting Oversight Board, to oversee
the audit of public companies 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 independent
audit reports for companies the securities of which
are sold to, and held by and for, public investors.
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 establishment
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 deter mination is made by the Commission under subsection
(d) of this section -
(1) register public accounting firms
that prepare audit reports for issuers, in accordance
with section 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, 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 persons 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 otherwise 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 obligations and
liabilities of accountants with respect thereto, by
registered 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.
(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 professional 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 enforce compliance with this title
by registered public accounting firms and associated
persons thereof. The Commission shall be responsible,
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, appointed from among prominent individuals
of integrity and reputation who have a demonstrated
commitment to the interests of investors and the public,
and an understanding of the responsibilities for and
nature of the financial disclosures required of issuers
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, concurrent 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 mem- bers 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 consultation 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 service for each.
(B) VACANCIES. - A vacancy on the
Board shall not affect the powers of the Board, but
shall be filled in the same manner as provided for appointments
under this section.
(5) TERM OF SERVICE. -
(A) IN GENERAL. - The term of service
of each Board member shall be 5 years, and until a successor
is appointed, except that -
(i) the terms of office of the initial
Board members (other than the chairperson) shall expire
in annual increments, 1 on each of the first 4 anni-
versaries of the initial date of appointment; and
(ii) any Board member appointed to
fill a vacancy occurring before the expiration of the
term for which the predecessor was appointed shall be
appointed only for the remainder of that term.
(B) TERM LIMITATION. - No person may
serve as a member of the Board, or as chairperson of
the Board, for more than 2 terms, whether or not such
terms of service are consecutive.
(6) REMOVAL FROM OFFICE. - A member
of the Board may be removed by the Commission from office,
in accordance with section 107(d)(3), for good cause
shown before the expiration of the term of that member.
(f) POWERS OF THE BOARD. - In addition to any authority
granted to the Board otherwise in this Act, the Board
shall have the power, subject to section 107 -
(1) to sue and be sued, complain and
defend, in its corporate name and through its own counsel,
with the approval of the Commission, in any Federal,
State, or other court;
(2) to conduct its operations and
maintain offices, and to exercise all other rights and
powers authorized by this Act, in any State, without
regard to any qualification, licensing, or other provision
of law in effect in such State (or a political subdivision
thereof);
(3) to lease, purchase, accept gifts
or donations of or otherwise acquire, improve, use,
sell, exchange, or convey, all of or an interest in
any property, wherever situated;
(4) to appoint such employees, accountants,
attorneys, and other agents as may be necessary or appropriate,
and to determine their qualifications, define their
duties, and fix their salaries or other compensation
(at a level that is comparable to private sector self-regulatory,
accounting, technical, supervisory, or other staff or
management positions);
(5) to allocate, assess, and collect
accounting support fees established pursuant to section
109, for the Board, and other fees and charges imposed
under this title; and
(6) to enter into contracts, execute
instruments, incur liabilities, and do any and all other
acts and things necessary, appropriate, or incidental
to the conduct of its operations and the exercise of
its obligations, rights, and powers imposed or granted
by this title.
(g) RULES OF THE BOARD. - The rules of the Board shall,
subject to the approval of the Commission -
(1) provide for the operation and
administration of the Board, the exercise of its authority,
and the performance of its responsibilities under this
Act;
(2) permit, as the Board determines
necessary or ap- propriate, delegation by the Board
of any of its functions to an individual member or employee
of the Board, or to a division of the Board, including
functions with respect to hearing, determining, ordering,
certifying, reporting, or otherwise acting as to any
matter, except that -
(A) the Board shall retain a discretionary
right to review 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 review thereof); and
(C) if the right to exercise a review
described in subparagraph (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 appropriate 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
statements) 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 Services of the House of Representatives,
not later than 30 days after the date of receipt of
that report by the Commission.
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