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[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 2824 Introduced in Senate (IS)]

109th CONGRESS
  2d Session
                                S. 2824

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

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                              May 17, 2006

  Mr. DeMint (for himself, Mr. Ensign, Mr. Martinez, Mr. Inhofe, Mr. 
  Burns, and Mr. Allen) introduced the following bill; which was read 
  twice and referred to the Committee on Banking, Housing, and Urban 
                                Affairs

_______________________________________________________________________

                                 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 (15 U.S.C. 7262) is 
amended--
            (1) in subsection (a), by striking ``The Commission'' and 
        inserting ``Subject to subsections (c) and (d), the 
        Commission'';
            (2) in subsection (b), by inserting ``, subject to 
        subsections (c) and (d),'' after ``for the issuer shall''; and
            (3) by adding at the end the following new subsections:
    ``(c) Smaller Public Company Exemption.--The rules of the 
Commission 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) has fewer than 1500 record beneficial holders of 
        securities;
            ``(4) 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 12 calendar months; or
            ``(5) 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) 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) shall establish 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 the 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 AND REPORT.

    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 the United Kingdom 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 Congress not later than 1 year 
after the date of enactment of this Act.
                                 <all>
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