15 USC 7213 - Auditing, quality control, and independence standards and rules

U.S Code last checked for updates: Apr 29, 2024

§ 7213.

Auditing, quality control, and independence standards and rules

(a)

Auditing, quality control, and ethics standards

(1)

In general

(2)

Rule requirements

In carrying out paragraph (1), the Board—

(A)

shall include in the auditing standards that it adopts, requirements that each registered public accounting firm shall—

(i)

prepare, and maintain for a period of not less than 7 years, audit work papers, and other information related to any audit report, in sufficient detail to support the conclusions reached in such report;

(ii)

provide a concurring or second partner review and approval of such audit report (and other related information), and concurring approval in its issuance, by a qualified person (as prescribed by the Board) associated with the public accounting firm, other than the person in charge of the audit, or by an independent reviewer (as prescribed by the Board); and

(iii)

in each audit report for an issuer, describe the scope of the auditor’s testing of the internal control structure and procedures of the issuer, required by section 7262(b) of this title, and present (in such report or in a separate report)—

(I)

the findings of the auditor from such testing;

(II)

an evaluation of whether such internal control structure and procedures—

(aa)

include maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the issuer;

(bb)

provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the issuer are being made only in accordance with authorizations of management and directors of the issuer; and

(III)

a description, at a minimum, of material weaknesses in such internal controls, and of any material noncompliance found on the basis of such testing.

(B)

shall include, in the quality control standards that it adopts with respect to the issuance of audit reports, requirements for every registered public accounting firm relating to—

(i)

monitoring of professional ethics and independence from issuers, brokers, and dealers on behalf of which the firm issues audit reports;

(ii)

consultation within such firm on accounting and auditing questions;

(iii)

supervision of audit work;

(iv)

hiring, professional development, and advancement of personnel;

(v)

the acceptance and continuation of engagements;

(vi)

internal inspection; and

(vii)

such other requirements as the Board may prescribe, subject to subsection (a)(1).

(3)

Authority to adopt other standards

(A)

In general

In carrying out this subsection, the Board—

(i)

may adopt as its rules, subject to the terms of section 7217 of this title, any portion of any statement of auditing standards or other professional standards that the Board determines satisfy the requirements of paragraph (1), and that were proposed by 1 or more professional groups of accountants that shall be designated or recognized by the Board, by rule, for such purpose, pursuant to this paragraph or 1 or more advisory groups convened pursuant to paragraph (4); and

(ii)

notwithstanding clause (i), shall retain full authority to modify, supplement, revise, or subsequently amend, modify, or repeal, in whole or in part, any portion of any statement described in clause (i).

(B)

Initial and transitional standards

(C)

Transition period for emerging growth companies

(4)

Advisory groups

(b)

Independence standards and rules

(c)

Cooperation with designated professional groups of accountants and advisory groups

(1)

In general

(2)

Board responses

(d)

Evaluation of standard setting process

(Pub. L. 107–204, title I, § 103, July 30, 2002, 116 Stat. 755; Pub. L. 111–203, title IX, § 982(d), July 21, 2010, 124 Stat. 1929; Pub. L. 112–106, title I, § 104, Apr. 5, 2012, 126 Stat. 310.)

cite as: 15 USC 7213