Sarbanes Oxley Act Section 202

 

SEC. 202. PREAPPROVAL REQUIREMENTS.
 
Section 10A of the Securities Exchange Act of 1934 (15 U.S.C.
78j–1), as amended by this Act, is amended by adding at the
end the following:
 
‘‘(i) PREAPPROVAL REQUIREMENTS.—
 
‘‘(1) IN GENERAL.—
 
‘‘(A) AUDIT COMMITTEE ACTION.—All auditing services
(which may entail providing comfort letters in connection
with securities underwritings or statutory audits required
for insurance companies for purposes of State law) and
non-audit services, other than as provided in subparagraph
(B), provided to an issuer by the auditor of the issuer
shall be preapproved by the audit committee of the issuer.
 
‘‘(B) DE MINIMUS EXCEPTION.—The preapproval requirement
under subparagraph (A) is waived with respect to
the provision of non-audit services for an issuer, if—
 
‘‘(i) the aggregate amount of all such non-audit
services provided to the issuer constitutes not more
than 5 percent of the total amount of revenues paid
by the issuer to its auditor during the fiscal year
in which the nonaudit services are provided;
 
‘‘(ii) such services were not recognized by the issuer
at the time of the engagement to be non-audit services; and
 
‘‘(iii) such services are promptly brought to the
attention of the audit committee of the issuer and
approved prior to the completion of the audit by the
audit committee or by 1 or more members of the audit
committee who are members of the board of directors
to whom authority to grant such approvals has been
delegated by the audit committee.
 
‘‘(2) DISCLOSURE TO INVESTORS.—Approval by an audit committee
of an issuer under this subsection of a non-audit service
to be performed by the auditor of the issuer shall be disclosed
to investors in periodic reports required by section 13(a).
 
‘‘(3) DELEGATION AUTHORITY.—The audit committee of an
issuer may delegate to 1 or more designated members of the
audit committee who are independent directors of the board
of directors, the authority to grant preapprovals required by
this subsection. The decisions of any member to whom authority
is delegated under this paragraph to preapprove an activity
under this subsection shall be presented to the full audit committee
at each of its scheduled meetings.
 
‘‘(4) APPROVAL OF AUDIT SERVICES FOR OTHER PURPOSES.—
In carrying out its duties under subsection (m)(2), if the audit
committee of an issuer approves an audit service within the
scope of the engagement of the auditor, such audit service
shall be deemed to have been preapproved for purposes of
this subsection.’’

 

   

 

 

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