Sarbanes-Oxley Act, 2002 for Financial Governance.
This is a short extract showing representative entries relating to Governance in Accountability.
Section 104: Inspections of Registered Public Accounting Firms
Annual quality reviews (inspections) must be conducted for firms that audit more than 100 issues, all others must be conducted every 3 years. The SEC and/or the Board may order a special inspection of any firm at any time.
Section 106: Foreign Public Accounting Firms.
The bill would subject foreign accounting firms who audit a U.S. company to registrations with the Board. This would include foreign firms that perform some audit work, such as in a foreign subsidiary of a U.S. company, that is relied on by the primary auditor.
Section 108: Accounting Standards.
The SEC is authorized to "recognize, as 'generally accepted'... any accounting principles" that are established by a standard-setting body that meets the bill's criteria, which include requirements that the body:
(1) be a private entity;
(2) be governed by a board of trustees (or equivalent body), the majority of whom are not or have not been associated persons with a public accounting firm for the past 2 years;
(3) be funded in a manner similar to the Board;
(4) have adopted procedures to ensure prompt consideration of changes to accounting principles by a majority vote;
(5) consider, when adopting standards, the need to keep them current and the extent to which international convergence of standards is necessary or appropriate.
Section 404: Management Assessment Of Internal Controls.
Requires each annual report of an issuer to contain an "internal control report", which shall:
(1) state the responsibility of management for establishing and maintaining an adequate internal control structure and procedures for financial reporting; and
(2) contain an assessment, as of the end of the issuer's fiscal year, of the effectiveness of the internal control structure and procedures of the issuer for financial reporting.
Each issuer's auditor shall attest to, and report on, the assessment made by the management of the issuer.
An attestation made under this section shall be in accordance with standards for attestation engagements issued or adopted by the Board.
An attestation engagement shall not be the subject of a separate engagement.
Section 409: Real Time Disclosure.
Issuers must disclose information on material changes in the financial condition or operations of the issuer on a rapid and current basis.