Sarbanes Oxley Act Section 104

SEC. 104. INSPECTIONS OF REGISTERED PUBLIC ACCOUNTING FIRMS.
 
(a) IN GENERAL.—The Board shall conduct a continuing program
of inspections to assess the degree of compliance of each
registered public accounting firm and associated persons of that
firm with this Act, the rules of the Board, the rules of the Commission,
or professional standards, in connection with its performance
of audits, issuance of audit reports, and related matters involving
issuers.
 
(b) INSPECTION FREQUENCY.—
 
(1) IN GENERAL.—Subject to paragraph (2), inspections
required by this section shall be conducted—
 
(A) annually with respect to each registered public
accounting firm that regularly provides audit reports for
more than 100 issuers; and
 
(B) not less frequently than once every 3 years with
respect to each registered public accounting firm that regularly
provides audit reports for 100 or fewer issuers.
 
(2) ADJUSTMENTS TO SCHEDULES.—The Board may, by rule,
adjust the inspection schedules set under paragraph (1) if the
Board finds that different inspection schedules are consistent
with the purposes of this Act, the public interest, and the
protection of investors. The Board may conduct special inspections
at the request of the Commission or upon its own motion.
 
(c) PROCEDURES.—The Board shall, in each inspection under
this section, and in accordance with its rules for such inspections—
 
(1) identify any act or practice or omission to act by the
registered public accounting firm, or by any associated person
thereof, revealed by such inspection that may be in violation
of this Act, the rules of the Board, the rules of the Commission,
the firm’s own quality control policies, or professional standards;
 
(2) report any such act, practice, or omission, if appropriate,
to the Commission and each appropriate State regulatory
authority; and
 
(3) begin a formal investigation or take disciplinary action,
if appropriate, with respect to any such violation, in accordance
with this Act and the rules of the Board.
 
(d) CONDUCT OF INSPECTIONS.—In conducting an inspection
of a registered public accounting firm under this section, the Board
shall—
 
(1) inspect and review selected audit and review engagements
of the firm (which may include audit engagements that
are the subject of ongoing litigation or other controversy
between the firm and 1 or more third parties), performed at
various offices and by various associated persons of the firm,
as selected by the Board;
 
(2) evaluate the sufficiency of the quality control system
of the firm, and the manner of the documentation and communication
of that system by the firm; and
 
(3) perform such other testing of the audit, supervisory,
and quality control procedures of the firm as are necessary
or appropriate in light of the purpose of the inspection and
the responsibilities of the Board.
 
(e) RECORD RETENTION.—The rules of the Board may require
the retention by registered public accounting firms for inspection
purposes of records whose retention is not otherwise required by
section 103 or the rules issued thereunder.
 
(f) PROCEDURES FOR REVIEW.—The rules of the Board shall
provide a procedure for the review of and response to a draft
inspection report by the registered public accounting firm under
inspection. The Board shall take such action with respect to such
response as it considers appropriate (including revising the draft
report or continuing or supplementing its inspection activities before
issuing a final report), but the text of any such response, appropriately
redacted to protect information reasonably identified by
the accounting firm as confidential, shall be attached to and made
part of the inspection report.
 
(g) REPORT.—A written report of the findings of the Board
for each inspection under this section, subject to subsection (h),
shall be—
 
(1) transmitted, in appropriate detail, to the Commission
and each appropriate State regulatory authority, accompanied
by any letter or comments by the Board or the inspector,
and any letter of response from the registered public accounting
firm; and
 
(2) made available in appropriate detail to the public (subject
to section 105(b)(5)(A), and to the protection of such confidential
and proprietary information as the Board may determine
to be appropriate, or as may be required by law), except
that no portions of the inspection report that deal with criticisms
of or potential defects in the quality control systems
of the firm under inspection shall be made public if those
criticisms or defects are addressed by the firm, to the satisfaction
of the Board, not later than 12 months after the date
of the inspection report.
 
(h) INTERIM COMMISSION REVIEW.—
 
(1) REVIEWABLE MATTERS.—A registered public accounting
firm may seek review by the Commission, pursuant to such
rules as the Commission shall promulgate, if the firm—
 
(A) has provided the Board with a response, pursuant
to rules issued by the Board under subsection (f), to the
substance of particular items in a draft inspection report,
and disagrees with the assessments contained in any final
report prepared by the Board following such response; or
 
(B) disagrees with the determination of the Board that
criticisms or defects identified in an inspection report have
not been addressed to the satisfaction of the Board within
12 months of the date of the inspection report, for purposes
of subsection (g)(2).
 
(2) TREATMENT OF REVIEW.—Any decision of the Commission
with respect to a review under paragraph (1) shall not
be reviewable under section 25 of the Securities Exchange
Act of 1934 (15 U.S.C. 78y), or deemed to be ‘‘final agency
action’’ for purposes of section 704 of title 5, United States
Code.
 
(3) TIMING.—Review under paragraph (1) may be sought
during the 30-day period following the date of the event giving rise to the review under subparagraph (A) or (B) of paragraph (1).
 

 

   

 

 

Sarbanes Oxley Compliance Professionals Association (SOXCPA)

Certified Sarbanes-Oxley Expert (CSOE) - Distance learning and online certification program