Sarbanes Oxley Act Section 407

 

SEC. 407. DISCLOSURE OF AUDIT COMMITTEE FINANCIAL EXPERT.
 
(a) RULES DEFINING ‘‘FINANCIAL EXPERT’’.—The Commission
shall issue rules, as necessary or appropriate in the public interest
and consistent with the protection of investors, to require each
issuer, together with periodic reports required pursuant to sections
13(a) and 15(d) of the Securities Exchange Act of 1934, to disclose
whether or not, and if not, the reasons therefor, the audit committee
of that issuer is comprised of at least 1 member who is a financial
expert, as such term is defined by the Commission.
 
(b) CONSIDERATIONS.—In defining the term ‘‘financial expert’’
for purposes of subsection (a), the Commission shall consider
whether a person has, through education and experience as a public
accountant or auditor or a principal financial officer, comptroller,
or principal accounting officer of an issuer, or from a position
involving the performance of similar functions—
 
(1) an understanding of generally accepted accounting principles
and financial statements;
 
(2) experience in—
 
(A) the preparation or auditing of financial statements
of generally comparable issuers; and
 
(B) the application of such principles in connection
with the accounting for estimates, accruals, and reserves;
 
(3) experience with internal accounting controls; and
 
(4) an understanding of audit committee functions.
 
(c) DEADLINE FOR RULEMAKING.—The Commission shall—
 
(1) propose rules to implement this section, not later than
90 days after the date of enactment of this Act; and
 
(2) issue final rules to implement this section, not later
than 180 days after that date of enactment.

 
   

 

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