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Sarbanes Oxley
Act Section 108
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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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