15 U.S.C. § 7201 — Definitions

Page 2318 TITLE 15—COMMERCE AND TRADE § 7201 CHAPTER 98—PUBLIC COMPANY ACCOUNT- ING REFORM AND CORPORATE RESPONSI- BILITY Sec. 7201. Definitions. 7202. Commission rules and enforcement. SUBCHAPTER I—PUBLIC COMPANY ACCOUNTING OVERSIGHT BOARD 7211. Establishment; administrative provisions. 7212. Registration with the Board. 7213. Auditing, quality control, and independence standards and rules. 7214. Inspections of registered public accounting firms. 7214a. Additional disclosure. 7215. Investigations and disciplinary proceedings. 7216. Foreign public accounting firms. 7217. Commission oversight of the Board. 7218. Accounting standards. 7219. Funding. 7220. Definitions. SUBCHAPTER II—AUDITOR INDEPENDENCE 7231. Exemption authority. 7232. Study of mandatory rotation of registered public accounting firms. 7233. Commission authority. 7234. Considerations by appropriate State regu- latory authorities. SUBCHAPTER III—CORPORATE RESPONSIBILITY 7241. Corporate responsibility for financial reports. 7242. Improper influence on conduct of audits. 7243. Forfeiture of certain bonuses and profits. 7244. Insider trades during pension fund blackout periods. 7245. Rules of professional responsibility for attor- neys. 7246. Fair funds for investors. SUBCHAPTER IV—ENHANCED FINANCIAL DISCLOSURES 7261. Disclosures in periodic reports. 7262. Management assessment of internal controls. 7263. Exemption. 7264. Code of ethics for senior financial officers. 7265. Disclosure of audit committee financial ex- pert. 7266. Enhanced review of periodic disclosures by issuers. § 7201. Definitions Except as otherwise specifically provided in this Act, in this Act, the following definitions shall apply: (1) Appropriate State regulatory authority The term ‘‘appropriate State regulatory au- thority’’ means the State agency or other au- thority responsible for the licensure or other regulation of the practice of accounting in the State or States having jurisdiction over a reg- istered public accounting firm or associated person thereof, with respect to the matter in question. (2) Audit The term ‘‘audit’’ means an examination of the financial statements of any issuer by an independent public accounting firm in accord- ance with the rules of the Board or the Com- mission (or, for the period preceding the adop- tion of applicable rules of the Board under sec- tion 7213 of this title, in accordance with then- applicable generally accepted auditing and re- lated standards for such purposes), for the pur- pose of expressing an opinion on such state- ments. (3) Audit committee The term ‘‘audit committee’’ means— (A) a committee (or equivalent body) es- tablished by and amongst the board of direc- tors of an issuer for the purpose of over- seeing the accounting and financial report- ing processes of the issuer and audits of the financial statements of the issuer; and (B) if no such committee exists with re- spect to an issuer, the entire board of direc- tors of the issuer. (4) Audit report The term ‘‘audit report’’ means a document or other record— (A) prepared following an audit performed for purposes of compliance by an issuer with the requirements of the securities laws; and (B) in which a public accounting firm ei- ther— (i) sets forth the opinion of that firm re- garding a financial statement, report, or other document; or (ii) asserts that no such opinion can be expressed. (5) Board The term ‘‘Board’’ means the Public Com- pany Accounting Oversight Board established under section 7211 of this title. (6) Commission The term ‘‘Commission’’ means the Securi- ties and Exchange Commission. (7) Issuer The term ‘‘issuer’’ means an issuer (as de- fined in section 78c of this title), the securities of which are registered under section 78l of this title, or that is required to file reports under section 78o(d) of this title, or that files or has filed a registration statement that has not yet become effective under the Securities Act of 1933 (15 U.S.C. 77a et seq.), and that it has not withdrawn. (8) Non-audit services The term ‘‘non-audit services’’ means any professional services provided to an issuer by a registered public accounting firm, other than those provided to an issuer in connection with an audit or a review of the financial statements of an issuer. (9) Person associated with a public accounting firm (A) In general The terms ‘‘person associated with a pub- lic accounting firm’’ (or with a ‘‘registered public accounting firm’’) and ‘‘associated person of a public accounting firm’’ (or of a ‘‘registered public accounting firm’’) mean any individual proprietor, partner, share- holder, principal, accountant, or other pro- fessional employee of a public accounting firm, or any other independent contractor or entity that, in connection with the prepara- tion or issuance of any audit report— (i) shares in the profits of, or receives compensation in any other form from, that firm; or Page 2319 TITLE 15—COMMERCE AND TRADE § 7201 (ii) participates as agent or otherwise on behalf of such accounting firm in any ac- tivity of that firm. (B) Exemption authority The Board may, by rule, exempt persons engaged only in ministerial tasks from the definition in subparagraph (A), to the extent that the Board determines that any such ex- emption is consistent with the purposes of this Act, the public interest, or the protec- tion of investors. (C) Investigative and enforcement authority For purposes of sections 7202(c), 7211(c), 7215, and 7217(c) of this title and the rules of the Board and Commission issued there- under, except to the extent specifically ex- cepted by such rules, the terms defined in subparagraph (A) shall include any person associated, seeking to become associated, or formerly associated with a public account- ing firm, except that— (i) the authority to conduct an investiga- tion of such person under section 7215(b) of this title shall apply only with respect to any act or practice, or omission to act, by the person while such person was associ- ated or seeking to become associated with a registered public accounting firm; and (ii) the authority to commence a dis- ciplinary proceeding under section 7215(c)(1) of this title, or impose sanctions under section 7215(c)(4) of this title, against such person shall apply only with respect to— (I) conduct occurring while such person was associated or seeking to become as- sociated with a registered public ac- counting firm; or (II) non-cooperation, as described in section 7215(b)(3) of this title, with re- spect to a demand in a Board investiga- tion for testimony, documents, or other information relating to a period when such person was associated or seeking to become associated with a registered pub- lic accounting firm. (10) Professional standards The term ‘‘professional standards’’ means— (A) accounting principles that are— (i) established by the standard setting body described in section 19(b) of the Secu- rities Act of 1933 [15 U.S.C. 77s(b)], or pre- scribed by the Commission under section 19(a) of that Act [15 U.S.C. 77s(a)] or sec- tion 78m(b) of this title; and (ii) relevant to audit reports for par- ticular issuers, or dealt with in the quality control system of a particular registered public accounting firm; and (B) auditing standards, standards for attes- tation engagements, quality control policies and procedures, ethical and competency standards, and independence standards (in- cluding rules implementing title II) that the Board or the Commission determines— (i) relate to the preparation or issuance of audit reports for issuers; and (ii) are established or adopted by the Board under section 7213(a) of this title, or are promulgated as rules of the Commis- sion. (11) Public accounting firm The term ‘‘public accounting firm’’ means— (A) a proprietorship, partnership, incor- porated association, corporation, limited li- ability company, limited liability partner- ship, or other legal entity that is engaged in the practice of public accounting or pre- paring or issuing audit reports; and (B) to the extent so designated by the rules of the Board, any associated person of any entity described in subparagraph (A). (12) Registered public accounting firm The term ‘‘registered public accounting firm’’ means a public accounting firm reg- istered with the Board in accordance with this Act. (13) Rules of the Board The term ‘‘rules of the Board’’ means the by- laws and rules of the Board (as submitted to, and approved, modified, or amended by the Commission, in accordance with section 7217 of this title), and those stated policies, prac- tices, and interpretations of the Board that the Commission, by rule, may deem to be rules of the Board, as necessary or appropriate in the public interest or for the protection of in- vestors. (14) Security The term ‘‘security’’ has the same meaning as in section 78c(a) of this title. (15) Securities laws The term ‘‘securities laws’’ means the provi- sions of law referred to in section 78c(a)(47) of this title and includes the rules, regulations, and orders issued by the Commission there- under. (16) State The term ‘‘State’’ means any State of the United States, the District of Columbia, Puer- to Rico, the Virgin Islands, or any other terri- tory or possession of the United States. (17) Foreign auditor oversight authority The term ‘‘foreign auditor oversight author- ity’’ means any governmental body or other entity empowered by a foreign government to conduct inspections of public accounting firms or otherwise to administer or enforce laws re- lated to the regulation of public accounting firms. (Pub. L. 107–204, § 2(a), July 30, 2002, 116 Stat. 746; Pub. L. 111–203, title IX, §§ 929F(g)(1), 981(a), 982(a)(2), July 21, 2010, 124 Stat. 1854, 1926, 1928.) Editorial Notes REFERENCES IN TEXT This Act, referred to in text, is Pub. L. 107–204, July 30, 2002, 116 Stat. 745, known as the Sarbanes-Oxley Act of 2002. For complete classification of this Act to the Code, see Tables. The Securities Act of 1933, referred to in par. (7), is title I of act May 27, 1933, ch. 38, 48 Stat. 74, which is classified generally to subchapter I (§ 77a et seq.) of chapter 2A of this title. For complete classification of this Act to the Code, see section 77a of this title and Tables. Page 2320 TITLE 15—COMMERCE AND TRADE § 7202 Title II, referred to in par. (10)(B), means title II of Pub. L. 107–204, July 30, 2002, 116 Stat. 771, which en- acted subchapter II of this chapter and amended sec- tions 78c, 78j–1, 78l and 78q of this title. For complete classification of title II to the Code, see Tables. AMENDMENTS 2010—Pub. L. 111–203, § 982(a)(2), substituted ‘‘Except as otherwise specifically provided in this Act, in this’’ for ‘‘In this’’ in introductory provisions. Par. (9)(C). Pub. L. 111–203, § 929F(g)(1), added subpar. (C). Par. (17). Pub. L. 111–203, § 981(a), added par. (17). Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2010 AMENDMENT Amendment by Pub. L. 111–203 effective 1 day after July 21, 2010, except as otherwise provided, see section 4 of Pub. L. 111–203, set out as an Effective Date note under section 5301 of Title 12, Banks and Banking. SHORT TITLE OF 2020 AMENDMENT Pub. L. 116–222, § 1, Dec. 18, 2020, 134 Stat. 1063, pro- vided that: ‘‘This Act [enacting section 7214a of this title and amending section 7214 of this title] may be cited as the ‘Holding Foreign Companies Accountable Act’.’’ SHORT TITLE Pub. L. 107–204, § 1(a), July 30, 2002, 116 Stat. 745, pro- vided that: ‘‘This Act [see Tables for classification] may be cited as the ‘Sarbanes-Oxley Act of 2002’.’’ GAO STUDY AND REPORT REGARDING CONSOLIDATION OF PUBLIC ACCOUNTING FIRMS Pub. L. 107–204, title VII, § 701, July 30, 2002, 116 Stat. 797, directed the Comptroller General, in consultation with the Commission, regulatory agencies in other countries of the Group of Seven Industrialized Nations, the Justice Department, and others, to study the fac- tors resulting in the consolidation of public accounting firms and their impact, and to report the study findings to Congress not later than 1 year after July 30, 2002. § 7202. Commission rules and enforcement (a) Regulatory action The Commission shall promulgate such rules and regulations, as may be necessary or appro- priate in the public interest or for the protec- tion of investors, and in furtherance of this Act. (b) Enforcement (1) In general A violation by any person of this Act, any rule or regulation of the Commission issued under this Act, or any rule of the Board shall be treated for all purposes in the same manner as a violation of the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) or the rules and regulations issued thereunder, consistent with the provisions of this Act, and any such person shall be subject to the same penalties, and to the same extent, as for a violation of that Act or such rules or regulations. (2) to (4) Omitted (c) Effect on Commission authority Nothing in this Act or the rules of the Board shall be construed to impair or limit— (1) the authority of the Commission to regu- late the accounting profession, accounting firms, or persons associated with such firms for purposes of enforcement of the securities laws; (2) the authority of the Commission to set standards for accounting or auditing practices or auditor independence, derived from other provisions of the securities laws or the rules or regulations thereunder, for purposes of the preparation and issuance of any audit report, or otherwise under applicable law; or (3) the ability of the Commission to take, on the initiative of the Commission, legal, ad- ministrative, or disciplinary action against any registered public accounting firm or any associated person thereof. (Pub. L. 107–204, § 3, July 30, 2002, 116 Stat. 749.) Editorial Notes REFERENCES IN TEXT This Act, referred to in text, is Pub. L. 107–204, July 30, 2002, 116 Stat. 745, known as the Sarbanes-Oxley Act of 2002. For complete classification of this Act to the Code, see Tables. The Securities Exchange Act of 1934, referred to in subsec. (b)(1), is act June 6, 1934, ch. 404, 48 Stat. 881, which is classified principally to chapter 2B (§ 78a et seq.) of this title. For complete classification of this Act to the Code, see section 78a of this title and Tables. CODIFICATION Section is comprised of section 3 of Pub. L. 107–204. Subsec. (b)(2)–(4) of section 3 of Pub. L. 107–204 amended sections 78l, 78u, and 78u–3 of this title. SUBCHAPTER I—PUBLIC COMPANY ACCOUNTING OVERSIGHT BOARD § 7211. Establishment; administrative provisions (a) Establishment of Board There is established the Public Company Ac- counting Oversight Board, to oversee the audit of companies that are subject to the securities laws, and related matters, in order to protect the interests of investors and further the public interest in the preparation of informative, accu- rate, and independent audit reports. The Board shall be a body corporate, operate as a nonprofit corporation, and have succession until dissolved by an Act of Congress. (b) Status The Board shall not be an agency or establish- ment of the United States Government, and, ex- cept as otherwise provided in this Act, shall be subject to, and have all the powers conferred upon a nonprofit corporation by, the District of Columbia Nonprofit Corporation Act. No mem- ber or person employed by, or agent for, the Board shall be deemed to be an officer or em- ployee of or agent for the Federal Government by reason of such service. (c) Duties of the Board The Board shall, subject to action by the Com- mission under section 7217 of this title, and once a determination is made by the Commission under subsection (d) of this section— (1) register public accounting firms that pre- pare audit reports for issuers, brokers, and dealers, in accordance with section 7212 of this title; (2) establish or adopt, or both, by rule, audit- ing, quality control, ethics, independence, and other standards relating to the preparation of