[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5184 Introduced in House (IH)]







107th CONGRESS
  2d Session
                                H. R. 5184

   To establish an Office of Audit Review within the Securities and 
 Exchange Commission to oversee the audits of certain public companies.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             July 23, 2002

Mr. Davis of Illinois introduced the following bill; which was referred 
                 to the Committee on Financial Services

_______________________________________________________________________

                                 A BILL


 
   To establish an Office of Audit Review within the Securities and 
 Exchange Commission to oversee the audits of certain public companies.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

     This Act may be cited as the ``Corporate Auditing Integrity Act of 
2002''.

SEC. 2. ESTABLISHMENT OF OFFICE OF AUDIT REVIEW.

     The Securities and Exchange Commission (referred to in this Act as 
the ``Commission'') shall establish the Office of Audit Review within 
the Division of Corporate Finance of the Commission to oversee the 
audits of certain public companies in accordance with the criteria 
established by the Commission under section 5.

SEC. 3. DUTIES OF OFFICE OF AUDIT REVIEW.

     The Office of Audit Review established under section 2 shall have 
the authority to participate in and supervise all stages of the audit 
of a public company, including the authority to--
            (1) review the audit plan and procedures of a public 
        company;
            (2) review any documents or work papers related to the 
        audit before, during, and after the audit;
            (3) submit questions or requests for information to the 
        audit committee of a public company and to the independent 
        auditor of such company;
            (4) meet with members of the audit committees of a public 
        company;
            (5) review any agreement between a public company whereby 
        the public accounting firm which audits the company is to also 
        provide consulting or other non-audit services to the public 
        company; and
            (6) require that a public company be audited by a public 
        accounting firm that has not audited such public company during 
        the preceding 3 years.

SEC. 4. FEE SYSTEM AUTHORIZED.

    (a) Self-Financing.--The Commission shall establish rules for the 
assessment and collection of fees sufficient to recover the costs and 
expenses of the Office of Audit Review.
    (b) Assessment and Collection.--The fees shall be assessed on 
public companies that file any financial statements, reports, or other 
documents with the Commission under the Securities Exchange Act of 1934 
(15 U.S.C. 78a et seq.). Such fees shall be collected through the 
public accounting firm that certifies such statement, report, or 
document.

SEC. 5. ESTABLISHMENT OF CRITERIA.

    The Commission shall by rule establish criteria to determine which 
public companies shall be subject to the enhanced oversight by the 
Office of Audit Review. Such criteria shall include--
            (1) the size and nature of the public company;
            (2) the participation of the public company in recent 
        mergers;
            (3) other key factors including labor relations, marketing 
        programs, new products, research, and development; and
            (4) any other circumstances identified by the Commission 
        that pose a high risk of business failure or wrong doing.

SEC. 6. REPORT.

    Within 1 year after the date of enactment of this Act, the 
Commission shall transmit to the Committee on Financial Services of the 
House of Representatives a report on its compliance with this Act. The 
report shall include a description of the functioning of the Office of 
Audit Review, established pursuant to section 2, the activities of such 
office under section 3, and a description of the criteria established 
by the Commission pursuant to section 5.

SEC. 7. DEFINITIONS.

    (a) Public Company.--The term ``public company'' refers to an 
issuer (as defined by section 3 of the Securities Exchange Act of 1934 
(15 U.S.C. 78c)), the securities of which are registered under section 
12 of that Act (15 U.S.C. 78l), or that is required to file reports 
pursuant to section 15(d) of that Act (15 U.S.C. 78o(d)).
    (b) Public Accounting Firm.--The term ``public accounting firm'' 
refers to a firm that conducts an audit of a public company for 
purposes of compliance by that company with the reporting requirements 
of section 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 
78o(d)).
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