[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1780 Introduced in House (IH)]







110th CONGRESS
  1st Session
                                H. R. 1780

To improve the implementation of section 404 of the Sarbanes-Oxley Act 
                                of 2002.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             March 29, 2007

 Mr. Kirk (for himself, Mr. Israel, Mr. Sensenbrenner, and Mr. Regula) 
 introduced the following bill; which was referred to the Committee on 
                           Financial Services

_______________________________________________________________________

                                 A BILL


 
To improve the implementation of section 404 of the Sarbanes-Oxley Act 
                                of 2002.

    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 ``Small Business Securities Protection 
Act''.

SEC. 2. ADDITIONAL IMPLEMENTATION REQUIREMENTS.

    Section 404 of Sarbanes-Oxley Act of 2002 (15 U.S.C. 7262) is 
amended by adding at the end the following new subsections:
    ``(c) Implementation.--Within 90 days after the date of enactment 
of the Small Business Securities Protection Act, the Commission shall 
prescribe rules, or amend existing rules, and the Board shall amend 
standards, in each case as applicable to issuers under subsections (a) 
and (b) of this section, that incorporate the following:
            ``(1) risk-based concepts in evaluating and assessing 
        internal control over financial reporting for issuers, 
        including--
                    ``(A) the establishment of priority standards and 
                identification of higher risk internal control areas 
                that are to be assessed;
                    ``(B) the frequency of testing of internal control 
                areas;
                    ``(C) time periods for implementing controls 
                following operational changes or additions; and
                    ``(D) standards for auditors to rely on management 
                workpapers in internal control assessments;
            ``(2) specific guidelines for measuring the terms 
        `material', `reasonable', `significant', and `sufficient' in 
        the context of internal control over financial reporting for 
        issuers, including--
                    ``(A) reference to specific examples of the 
                appropriate application of those terms; and
                    ``(B) establishment of a means for timely response 
                by the Commission or Board, as applicable, to requests 
                by issuers and registered public accounting firms for 
                guidance as to the appropriate application of those 
                terms;
            ``(3) a requirement that the Board consider the efficiency 
        of audit practices in its inspections conducted under section 
        104;
            ``(4) specific alternative requirements for smaller issuers 
        that reflect--
                    ``(A) the relative size and complexity of smaller 
                issuers; and
                    ``(B) the relative financial and manpower burdens 
                placed on smaller issuers in testing and documenting 
                internal controls, taking into account the interests of 
                investors and other stakeholders in smaller issuers; 
                and
            ``(5) revised standards for independence by auditors to 
        permit the rendering of internal control advice for resolution 
        of internal control issues and related liability safe harbors 
        for auditors providing such advice to smaller issuers.
    ``(d) Definition of Smaller Issuer.--For purposes of subsection 
(c), the term `smaller issuer' means an issuer that meets any of the 
following conditions as of the end of its fiscal year:
            ``(1) the total market capitalization of the issuer is less 
        than $700,000,000;
            ``(2) the issuer has fewer than 300 record and beneficial 
        holders of voting and non-voting common equity;
            ``(3) the issuer has been subject to the requirements of 
        sections 13(a) or 15(d) of the Securities Exchange Act of 1934 
        for a period of less than twelve calendar months; or
            ``(4) the issuer has not filed, and was not required to 
        file, an annual report pursuant to section 13(a) or 15(d) of 
        the Securities Exchange Act of 1934.''.
                                 <all>