TITLE I - PUBLIC COMPANY ACCOUNTING OVERSIGHT BOARD
SEC. 108. ACCOUNTING STANDARDS.
(a) AMENDMENT TO SECURITIES ACT OF 1933. - Section 19 of the Securities Act
of 1933 (15 U.S.C. 77s) is amended
(1) by redesignating subsections (b) and (c) as subsections
(c) and (d), respectively; and
(2) by inserting after subsection (a) the following:
"(b) RECOGNITION OF ACCOUNTING STANDARDS. -
"(1) IN GENERAL. - In carrying out its authority under
subsection (a) and under section 13(b) of the Securities Exchange Act of 1934,
the Commission may recognize, as ‘generally accepted’ for purposes
of the securities laws, any accounting principles established by a standard
setting body -
"(A) that -
"(i) is organized as a private entity;
"(ii) has, for administrative and operational purposes,
a board of trustees (or equivalent body) serving in the public interest, the
majority of whom are not, concurrent with their service on such board, and have
not been during the 2-year period preceding such service, associated persons
of any registered public accounting firm;
"(iii) is funded as provided in section 109 of the Sarbanes-Oxley
Act of 2002;
"(iv) has adopted procedures to ensure prompt consideration,
by majority vote of its members, of changes to accounting principles necessary
to reflect emerging accounting issues and changing business practices; and
"(v) considers, in adopting accounting principles, the
need to keep standards current in order to reflect changes in the business environment,
the extent to which international convergence on high quality accounting standards
is necessary or appropriate in the public interest and for the protection of
investors; and
"(B) that the Commission determines has the capacity
to assist the Commission in fulfilling the requirements of subsection (a) and
section 13(b) of the Securities Exchange Act of 1934, because, at a minimum,
the standard setting body is capable of improving the accuracy and effectiveness
of financial reporting and the protection of investors under the securities
laws.
"(2) ANNUAL REPORT. - A standard
setting body described in paragraph (1) shall submit an annual report to the
Commission and the public, containing audited financial statements of that standard
setting body.".
(b) COMMISSION AUTHORITY. - The Commission shall promulgate such rules and
regulations to carry out section 19(b) of the Securities Act of 1933, as added
by this section, as it deems necessary or appropriate in the public interest
or for the protection of investors.
(c) NO EFFECT ON COMMISSION POWERS. - Nothing in this Act, including this section
and the amendment made by this section, shall be construed to impair or limit
the authority of the Commission to establish accounting principles or standards
for purposes of enforcement of the securities laws.
(d) STUDY AND REPORT ON ADOPTING PRINCIPLES-BASED ACCOUNTING. -
(1) STUDY. -
(A) IN GENERAL. - The Commission shall conduct a study on
the adoption by the United States financial reporting system of a principles-based
accounting system.
(B) STUDY TOPICS. - The study required by subparagraph (A)
shall include an examination of -
(i) the extent to which principles-based accounting and financial
reporting exists in the United States;
(ii) the length of time required for change from a rules-based
to a principles-based financial reporting system;
(iii) the feasibility of and proposed methods by which a principles-based
system may be implemented; and
(iv) a thorough economic analysis of the implementation of
a principles-based system.
(2) REPORT. - Not later than 1 year after the date of enactment
of this Act, the Commission shall submit a report on the results of the study
required by paragraph (1) to the Committee on Banking, Housing, and Urban Affairs
of the Senate and the Committee on Financial Services of the House of Representatives.
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