Page:United States Statutes at Large Volume 116 Part 1.djvu/799

 PUBLIC LAW 107-204-^ULY 30, 2002 116 STAT. 773 "(2) DISCLOSURE TO INVESTORS.— A pproval by an audit committee of an issuer under this subsection of a non-audit service to be performed by the auditor of the issuer shall be disclosed to investors in periodic reports required by section 13(a). "(3) DELEGATION AUTHORITY,— The audit committee of an issuer may delegate to 1 or more designated members of the audit committee who are independent directors of the board of directors, the authority to grant preapprovals required by this subsection. The decisions of any member to whom authority is delegated under this paragraph to preapprove an activity under this subsection shall be presented to the full audit committee at each of its scheduled meetings. "(4) APPROVAL OF AUDIT SERVICES FOR OTHER PURPOSES.— In carrying out its duties under subsection (m)(2), if the audit committee of an issuer approves an audit service within the scope of the engagement of the auditor, such audit service shall be deemed to have been preapproved for purposes of this subsection.". SEC. 203. AUDIT PARTNER ROTATION. Section lOA of the Securities Exchange Act of 1934 (15 U.S.C. 78J-1), as amended by this Act, is amended by adding at the end the following: "(j) AUDIT PARTNER ROTATION.—It shall be unlawful for a registered public accounting firm to provide audit services to an issuer if the lead (or coordinating) audit partner (having primary responsibility for the audit), or the audit partner responsible for reviewing the audit, has performed audit services for that issuer in each of the 5 previous fiscal years of that issuer.". SEC. 204. AUDITOR REPORTS TO AUDIT COMMITTEES. Section lOA of the Securities Exchange Act of 1934 (15 U.S.C. 78J-1), as amended by this Act, is amended by adding at the end the following: "(k) REPORTS TO AUDIT COMMITTEES.—Each registered public accounting firm that performs for any issuer any audit required by this title shall timely report to the audit committee of the issuer— "(1) all critical accounting policies and practices to be used; "(2) all alternative treatments of financial information within generally accepted accounting principles that have been discussed with management officials of the issuer, ramifications of the use of such alternative disclosures and treatments, and the treatment preferred by the registered public accounting firm; and "(3) other material written communications between the registered public accounting firm and the management of the issuer, such as any management letter or schedule of unadjusted differences.". SEC. 205. CONFORMING AMENDMENTS. (a) DEFINITIONS.— Section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)) is amended by adding at the end the following: "(58) AUDIT COMMITTEE.—The term 'audit committee' means— "(A) a committee (or equivalent body) established by and amongst the board of directors of an issuer for the

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