Sarbanes Oxley Act Section 108

 

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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