Trusted Foreign Auditing Act of 2023
This bill expands a securities trading prohibition currently applicable to companies that use a foreign public accounting firm not subject to inspections by the Public Company Accounting Oversight Board.
Under the bill, a company’s securities are prohibited from trade on a national securities exchange or through any other method regulated by the Securities and Exchange Commission if a company that is headquartered in a country of concern retains a compromised auditor to prepare an audit report. The bill defines a country of concern as North Korea, China, Russia, Iran, or a country identified as a threat to U.S. security in an annual report by the Office of the Director of National Intelligence. The bill defines a compromised auditor as an independent branch or office of a registered public accounting firm that is subject to the jurisdiction and laws of a country of concern, is controlled or influenced by a country of concern, or has entered into a particular type of relationship with a country of concern.
Further, board hearings to investigate and discipline registered public accounting firms must be public if a compromised auditor is a party to the hearing.
[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 6769 Introduced in House (IH)]
<DOC>
118th CONGRESS
1st Session
H. R. 6769
To amend the Sarbanes-Oxley Act of 2002 to provide for disclosure
regarding foreign jurisdictions that hinder inspections, and for other
purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
December 13, 2023
Ms. Stefanik (for herself, Mr. Luetkemeyer, Mrs. Hinson, Mr. Nunn of
Iowa, and Mr. Donalds) introduced the following bill; which was
referred to the Committee on Financial Services
_______________________________________________________________________
A BILL
To amend the Sarbanes-Oxley Act of 2002 to provide for disclosure
regarding foreign jurisdictions that hinder inspections, and for other
purposes.
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 ``Trusted Foreign Auditing Act of
2023''.
SEC. 2. INSPECTION OF REGISTERED PUBLIC ACCOUNTING FIRMS.
Section 104(i) of the Sarbanes-Oxley Act of 2002 (15 U.S.C.
7214(i)) is amended--
(1) in paragraph (1)--
(A) by redesignating subparagraphs (A) and (B) as
subparagraphs (C) and (D), respectively; and
(B) by inserting before subparagraph (C), as so
redesignated, the following:
``(A) the term `compromised auditor' means, with
respect to a registered public accounting firm, an
independent branch or office of that firm (or a
subsidiary of such a branch or office) that--
``(i) is subject to the jurisdiction and
laws of the government of a covered country;
``(ii) is directly or indirectly
controlled, directed, or materially influenced
by a covered country;
``(iii) has a manager or owner, or conducts
any operation, that is subject to the direct
influence of a covered country; or
``(iv) has entered into any arrangement,
agreement, or relationship with the government
or political party of a covered country that
could compromise the objectivity, integrity, or
independence of the branch, office, or
subsidiary in performing auditing or
attestation services;
``(B) the term `covered country' means--
``(i) any country (including any special
administrative region of such country)
identified as a threat to the national security
of the United States in the most recent report
submitted to Congress by the Director of
National Intelligence pursuant to section 108B
of the National Security Act of 1947 (50 U.S.C.
3043b) (commonly referred to as the `Annual
Threat Assessment'); or
``(ii) any covered nation (as defined in
section 4872(d)(2) of title 10, United States
Code);'';
(2) in paragraph (2)(A)--
(A) in the matter preceding clause (i), by striking
``paragraph (1)(A)'' and inserting ``paragraph
(1)(C)''; and
(B) in clause (ii), by inserting ``is a compromised
auditor that'' before ``the Board is unable''; and
(3) by adding at the end the following:
``(5) Trading prohibition.--If a covered issuer that is
headquartered in a country of concern retains a compromised
auditor to prepare an audit report described in paragraph
(2)(A) for the covered issuer, the trading prohibition
described in paragraph (3) shall apply to the covered
issuer.''.
SEC. 3. PUBLIC HEARINGS.
Section 105(c) of the Sarbanes-Oxley Act of 2002 (15 U.S.C.
7215(c)) is amended by striking paragraph (2) and inserting the
following:
``(2) Public hearings.--
``(A) Definitions.--In this paragraph, the terms
`compromised auditor' and `covered issuer' have the
meanings given those terms in section 104(i)(1).
``(B) Conditions.--Hearings under this section
shall not be public, unless--
``(i) a compromised auditor retained by a
covered issuer is a party to the hearing; or
``(ii) otherwise ordered by the Board for
good cause shown, with the consent of the
parties to such hearing.''.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Financial Services.
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