I 

110TH CONGRESS 

1ST SESSION H. R. 1049 

To reduce the unintended costs and burdens that the Sarbanes-Oxley Act 

of 2002 imposes on United States businesses, while maintaining that 

Act’s goals of bolstering confidence in the integrity of publicly held 

companies. 

IN THE HOUSE OF REPRESENTATIVES 

FEBRUARY 14, 2007 

Mr. GARRETT of New Jersey (for himself, Mr. HENSARLING, Mr. FEENEY, 

Mr. PRICE of Georgia, Mr. PAUL, Mr. GINGREY, Mr. WESTMORELAND, 

Mr. CARTER, Mr. GOODE, Mrs. MYRICK, Mr. GOHMERT, Mr. LAMBORN, 

Mr. FLAKE, Mr. AKIN, Mr. ROYCE, and Mr. NEUGEBAUER) introduced 

the following bill; which was referred to the Committee on Financial Services 

A BILL 

To reduce the unintended costs and burdens that the Sarbanes-Oxley Act of 2002 imposes on United States businesses, while maintaining that Act’s goals of bolstering 

confidence in the integrity of publicly held companies. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Amend Misinterpreted 

5 Excessive Regulation In Corporate America Act’’. 


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1 SEC. 2. FINDINGS. 

2 Congress finds the following: 

3 (1) The stated intent of the Sarbanes-Oxley Act 

4 of 2002 was to restore confidence and integrity in 

5 our nation’s financial markets through increased 

6 transparency and accountability. 

7 (2) The regulatory interpretation of section 404 

8 of that Act has led to many unintended con9 sequences, such as— 

10 (A) diverting valuable resources away from 

11 other legitimate business needs; 

12 (B) creating massive and tedious docu13 mentation requirements; and 

14 (C) discouraging the public listing of both 

15 international and domestic companies on 

16 United States markets. 

17 (3) Nine out of ten complaints about the Sar18 banes-Oxley Act of 2002 are related to section 404. 

19 (4) Ninety percent of international small com20 panies have listed in international markets and not 

21 in the United States markets. 

22 (5) The out-of-pocket costs have been $4 mil23 lion to $6 million per accelerated filer, more than 50 

24 times original Securities and Exchange Commission 

25 estimates. 


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1 (6) Total economic costs including opportunity 

2 costs and social implications are up to $1.4 trillion. 

3 SEC. 3. CREATION OF OMBUDSMAN FOR THE PCAOB. 

4 Title I of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 

5 7211 et seq.) is amended by adding at the end the fol6 lowing new section: 

7 ‘‘SEC. 110. OMBUDSMAN. 

8 ‘‘(a) ESTABLISHMENT REQUIRED.—Not later than 

9 180 days after the date of enactment of the Amend Mis10 interpreted Excessive Regulation In Corporate America 

11 Act, the Board shall appoint an ombudsman for the 

12 Board. The Ombudsman shall report directly to the Chair13 man. 

14 ‘‘(b) DUTIES OF OMBUDSMAN.—The ombudsman ap15 pointed in accordance with subsection (a) for the Board 

16 shall— 

17 ‘‘(1) act as a liaison between the Board and— 

18 ‘‘(A) any registered public accounting firm 

19 or issuer with respect to issues or disputes con20 cerning the preparation or issuance of any audit 

21 report with respect to that issuer; and 

22 ‘‘(B) any affected registered public ac23 counting firm or issuer with respect to— 

24 ‘‘(i) any problem such firm or issuer 

25 may have in dealing with the Board resultVerDate Aug 31 2005 00:13 Feb 18, 2007 Jkt 059200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H1049.IH H1049

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1 ing from the regulatory activities of the 

2 Board, particularly with regard to the im3 plementation of section 404; and 

4 ‘‘(ii) issues caused by the relationships 

5 of registered public accounting firms and 

6 issuers generally; and 

7 ‘‘(2) assure that safeguards exist to encourage 

8 complainants to come forward and to preserve con9 fidentiality; and 

10 ‘‘(3) carry out such activities, and any other ac11 tivities assigned by the Board, in accordance with 

12 guidelines prescribed by the Board.’’. 

13 SEC. 4. REORGANIZATION OF THE BOARD OF THE PCAOB. 

14 (a) APPOINTMENT TO THE BOARD.— 

15 (1) AMENDMENT.—Subparagraph (A) of sec16 tion 101(e)(4) of the Sarbanes-Oxley Act of 2002 

17 (15 U.S.C. 7211(e)(4)(B)) is amended to read as 

18 follows: 

19 ‘‘(A) PRESIDENTIAL APPOINTMENT.—The 

20 members of the Board shall be appointed by the 

21 President, by and with the advice and consent 

22 of the Senate.’’. 

23 (2) TRANSITION.—The members of the Public 

24 Company Accounting Oversight Board serving on 

25 the date of enactment of this Act may continue to 


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1 serve until a successor is appointed pursuant to the 

2 amendment made by paragraph (1) of this sub3 section. The term of office of any such successor 

4 shall expire at the time of the expiration of the term 

5 of his or her predecessor, as designated by the Presi6 dent at the time of the appointment. 

7 (3) COMPENSATION.—Section 5312 of title 5, 

8 United States Code, is amended by adding at the 

9 end the following: 

10 ‘‘Chairman and Members, Public Company Account11 ing Oversight Board.’’. 

12 (4) CONFORMING AMENDMENTS.— 

13 (A) Sections 101(e) of the Sarbanes-Oxley 

14 Act of 2002 (15 U.S.C. 7211(e)) is amended by 

15 striking paragraph (6). 

16 (B) Section 107(d) of such Act (15 U.S.C. 

17 7217(d)) is amended by striking paragraph (3). 

18 (b) FUNDING.—Section 109(f) of such Act is amend19 ed by adding at the end the following new sentence: ‘‘The 

20 Congress reserves the authority to establish annual or 

21 other periodic limits upon the amount of fees which may 

22 be collected under this section on behalf of the Board.’’. 


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1 SEC. 5. REDUCTIONS OF INTERNAL CONTROL IMPLEMEN2 TATION COSTS. 

3 (a) REVISIONS REQUIRED.—Not later than Decem4 ber 31, 2007— 

5 (1) the Securities and Exchange Commission 

6 shall adopt revisions to its rules under section 

7 404(a) of the Sarbanes-Oxley Act of 2002 (15 

8 U.S.C. 7211(a)) relating to management’s assess9 ment of an issuer’s internal control structure and 

10 procedures; and 

11 (2) the Public Company Accounting Oversight 

12 Board shall adopt revisions to its standards under 

13 section 404(b) of such Act for auditor attestation to 

14 and reporting on such management assessment. 

15 (b) COST OF IMPLEMENTATION REDUCTION.—In 

16 adopting the revisions required by subsection (a), the 

17 Commission and the Board shall reduce the costs of the 

18 implementation of section 404, consistent with the inten19 tion of the Congress that such section not increase signifi20 cantly the cost of the annual audits of financial statements 

21 under section 13(a) and 15(d) of the Securities Exchange 

22 Act of 1934 (15 U.S.C. 78m(a), 78o(d)). 

23 (c) RISK-BASED IMPLEMENTATION.—In adopting the 

24 revisions required by subsection (a), the Commission shall 

25 adopt a more risk-based statement on internal control re26 porting that focuses internal control review on financial 


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1 controls having significant risk of failing to prevent finan2 cial damages that would be material to the financial state3 ments of the issuer. 

4 SEC. 6. SEPARATE ENGAGEMENTS FOR INTERNAL CON5 TROL EVALUATIONS. 

6 Section 404(b) of the Sarbanes-Oxley Act of 2002 

7 (15 U.S.C. 7262(b)) is amended— 

8 (1) by inserting before the period at the end of 

9 the first sentence the following: ‘‘, or the issuer shall 

10 separately engage a different registered public ac11 counting firm which shall attest to and report on 

12 such assessment’’; and 

13 (2) by striking the last sentence. 

14 SEC. 7. PRIVATE RIGHTS OF ACTION. 

15 Section 404 of the Sarbanes-Oxley Act of 2002 (15 

16 U.S.C. 7262) is amended by adding at the end the fol17 lowing new subsection: 

18 ‘‘(c) NO PRIVATE RIGHTS OF ACTION.—No private 

19 right of action may be brought against any registered pub20 lic accounting firm in any Federal or State court on the 

21 basis of a violation or alleged violation of the requirements 

22 of this section or standards issued by the Board under 

23 or for purposes of implementing this section.’’. 

Æ 


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