Sox Title 2

Topics: U.S. Securities and Exchange Commission, Auditing, Internal control Pages: 7 (1979 words) Published: June 18, 2013
TITLE II—AUDITOR INDEPENDENCE

SEC. 201. SERVICES OUTSIDE THE SCOPE OF PRACTICE OF AUDITORS. (a) PROHIBITED ACTIVITIES.—Section 10A of the Securities
Exchange Act of 1934 (15 U.S.C. 78j–1) is amended by adding at the end the following:

‘‘(g) PROHIBITED ACTIVITIES.—Except as provided in subsection (h), it shall be unlawful for a registered public accounting firm (and any associated person of that firm, to the extent determined appropriate by the Commission) that performs for any issuer any audit required by this title or the rules of the Commission under this title or, beginning 180 days after the date of commencement of the operations of the Public Company Accounting Oversight Board established under section 101 of the Sarbanes-Oxley Act of 2002 (in this section referred to as the ‘Board’), the rules of the Board, to provide to that issuer, contemporaneously with the audit, any non-audit service, including—

‘‘(1) bookkeeping or other services related to the accounting records or financial statements of the audit client;

‘‘(2) financial information systems design and implementation;
‘‘(3) appraisal or valuation services, fairness opinions, or contribution-in-kind reports;
‘‘(4) actuarial services;

‘‘(5) internal audit outsourcing services;

‘‘(6) management functions or human resources;

‘‘(7) broker or dealer, investment adviser, or investment banking services;
‘‘(8) legal services and expert services unrelated to the audit; and
‘‘(9) any other service that the Board determines, by regulation ,is impermissible.
‘‘(h) PREAPPROVAL REQUIRED FOR NON-AUDIT SERVICES.—
A registered public accounting firm may engage in any non-audit service, including tax services, that is not described in any of paragraphs(1) through (9) of subsection (g) for an audit client, only if the activity is approved in advance by the audit committee of the issuer, in accordance with subsection (i).’’.

(b) EXEMPTION AUTHORITY.—The Board may, on a case by case basis, exempt any person, issuer, public accounting firm, or transaction from the prohibition on the provision of services under section 10A(g) of the Securities Exchange Act of 1934 (as added by this section), to the extent that such exemption is necessary or appropriate in the public interest and is consistent with the protection of investors, and subject to review by the Commission in the same manner as for rules of the Board under section 107.

SEC. 202. PREAPPROVAL REQUIREMENTS.

Section 10A of the Securities Exchange Act of 1934 (15 U.S.C.78j–1), as amended by this Act, is amended by adding at the end the following:
‘(i) PREAPPROVAL REQUIREMENTS.—

‘‘(1) IN GENERAL.—

‘‘(A) AUDIT COMMITTEE ACTION.—All auditing services (which may entail providing comfort letters in connection with securities underwritings or statutory audits required for insurance companies for purposes of State law) and non-audit services, other than as provided in subparagraph (B), provided to an issuer by the auditor of the issuer shall be preapproved by the audit committee of the issuer.

‘‘(B) DE MINIMUS EXCEPTION.—The preapproval requirement under subparagraph (A) is waived with respect to the provision of non-audit services for an issuer, if—
‘‘(i) the aggregate amount of all such non-audit services provided to the issuer constitutes not more than 5 percent of the total amount of revenues paid by the issuer to its auditor during the fiscal year in which the nonaudit services are provided;

‘‘(ii) such services were not recognized by the issuer at the time of the engagement to be non-audit services; and
‘‘(iii) such services are promptly brought to the attention of the audit committee of the issuer and approved prior to the completion of the audit by the audit committee or by 1 or more members of the audit committee who are members of the board of directors to whom authority to grant such approvals has been delegated by the audit committee.

‘‘(2)...
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