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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
determination
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,
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 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
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 anniversaries 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
appropriate,
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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