H.R.5405 - Social Security Identity Theft Protection Act

COMPETE Act (Introduced in House)

HR 5405 IH

109th CONGRESS 2d Session

 

H. R. 5405

 

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

 

IN THE HOUSE OF REPRESENTATIVES

 

May 17, 2006

Mr. FEENEY (for himself, Mr. MEEKS of New York, Mr. SESSIONS, Mrs. MILLER of Michigan, Mr. HENSARLING, Mr. JONES of North Carolina, Ms. FOXX, Mr. GARRETT of New Jersey, Mr. STEARNS, Mr. TIAHRT, Mr. WICKER, Mr. ROYCE, Mr. PENCE, and Mr. FLAKE) introduced the following bill; which was referred to the Committee on Financial Services

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A BILL

 

To reduce the burdens of 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 `Competitive and Open Markets that Protect and Enhance the Treatment of Entrepreneurs Act' or the `COMPETE Act'.

SEC. 2. IMPLEMENTATION OF INTERNAL CONTROL REPORTING AND ASSESSMENT.

Section 404 of the Sarbanes-Oxley Act of 2002 is amended--

(1) in subsection (a), by striking `The Commission' and inserting `Subject to subsections (c), (d), and (e), the Commission';

(2) in subsection (b), by inserting `subject to subsections (c), (d), and (e),' after `for the issuer shall'; and

(3) by adding at the end the following new subsections:

`(c) Smaller Public Company Exemption- The Commission's rules under subsection (a) shall permit an issuer to elect voluntarily not to provide the assessment described in subsection (a)(2) and the attestation thereof described in subsection (b) if the issuer--

`(1) has a total market capitalization for the relevant reporting period of less than $700,000,000;

`(2) has total product revenue for that reporting period of less than $125,000,000;

`(3) the issuer has fewer than 1500 record beneficial holders;

`(4) 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

`(5) 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.

`(d) Random Audits- The Commission's rules under this section shall provide that, after the first year for which an attestation and report is made by a registered public accounting firm under subsection (b), the assessment by the management of the issuer under subsection (a)(2) shall be subject to examination, attestation, and report on a schedule determined by a system of random selection, as specified in such rules. The Commission shall specify in such rules that not less than 10 percent of the issuers listed on each national securities exchange will annually be subjected to such examination, attestation, and report. Such random selection system shall be administered by the national securities exchange on which the securities of the issuer are listed.

`(e) De Minimus Standard; Additional Guidance; Independence- In implementing the requirements of this section, the Commission and the Board--

`(1) shall alter the standard for review from a remote likelihood standard for noting weaknesses under this section to a 5 percent de minimus material weakness criteria (based on 5 percent of net profits);

`(2) specific guidelines for measuring the terms `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; and

`(3) shall modify the rules concerning the independence of registered public accounting firms to perform assessments under subsection (b) to allow prudent interaction between such firms and internal consultants.'.

SEC. 3. BRITISH ACCOUNTING SYSTEM STUDY.

The Securities and Exchange Commission and the Public Company Accounting Oversight Board shall jointly conduct a study comparing and contrasting the principles-based Turnbull Guidance under the securities laws of Great Britain to the implementation of section 404 of the Sarbanes-Oxley Act of 2002. The Commission and the Board shall submit a report on the results of such study to the Congress not later than one year after the date of enactment of this Act.