Given the task definition and input, reply with output. In this task, you are given text for US Congressional and California state bills, your task is to generate a summary for this bill.

SECTION 1. SHORT TITLE.

This Act may be cited as the ''Financial Fraud Detection and
Disclosure Act''.

SEC. 2. AMENDMENT TO SECURITIES EXCHANGE ACT OF 1934.

(a) Amendments to the Securities Exchange Act of 1934.--The
Securities Exchange Act of 1934 is amended by inserting after section
10 (15 U.S.C. 78j) the following new section:

''fraud detection and disclosure

''Sec. 10A. (a) Audit Requirements.--Each audit required pursuant
to this title of an issuer's financial statements by an independent
public accountant shall include, in accordance with methods prescribed
by the Commission, the following:
''(1) procedures designed to provide reasonable assurance
of detecting illegal acts that would have a direct and material
effect on the determination of financial statement amounts;
''(2) procedures designed to identify related party
transactions which are material to the financial statements or
otherwise require disclosure therein; and
''(3) an evaluation of whether there is substantial doubt
about the issuer's ability to continue as a going concern over
the ensuing fiscal year.
''(b) Required Response to Audit Discoveries.--
''(1) Investigation and report to management.--If, in the
course of conducting any audit pursuant to this title to which
subsection (a) applies, the independent public accountant
detects or otherwise becomes aware of information indicating
that an illegal act (whether or not perceived to have a
material effect on the issuer's financial statements) has or
may have occurred, the accountant shall, in accordance with
methods prescribed by the Commission--
''(A)(i) determine whether it is likely that an
illegal act has occurred, and (ii) if so, determine and
consider the possible effect of the illegal act on the
financial statements of the issuer, including any
contingent monetary effects, such as fines, penalties,
and damages; and
''(B) as soon as practicable inform the appropriate
level of the issuer's management and assure that the
issuer's audit committee, or the issuer's board of
directors in the absence of such a committee, is
adequately informed with respect to illegal acts that
have been detected or otherwise come to the attention
of such accountant in the course of the audit, unless
the illegal act is clearly inconsequential.
''(2) Response to failure to take remedial action.--If,
having first assured itself that the audit committee of the
board of directors of the issuer or the board (in the absence
of an audit committee) is adequately informed with respect to
illegal acts that have been detected or otherwise come to the
accountant's attention in the course of such accountant's
audit, the independent public accountant concludes that--
''(A) any such illegal act has a material effect on
the financial statements of the issuer,
''(B) senior management has not taken, and the
board of directors has not caused senior management to
take, timely and appropriate remedial actions with
respect to such illegal act, and
''(C) the failure to take remedial action is
reasonably expected to warrant departure from a
standard auditor's report, when made, or warrant
resignation from the audit engagement,
the independent public accountant shall, as soon as
practicable, directly report its conclusions to the board of
directors.
''(3) Notice to commission; response to failure to
notify.--An issuer whose board of directors has received a
report pursuant to paragraph (2) shall inform the Commission by
notice within one business day of receipt of such report and
shall furnish the independent public accountant making such
report with a copy of the notice furnished the Commission. If
the independent public accountant making such report shall fail
to receive a copy of such notice within the required one-
business-day period, the independent public accountant shall--
''(A) resign from the engagement; or
''(B) furnish to the Commission a copy of its
report (or the documentation of any oral report given)
within the next business day following such failure to
receive notice.
''(4) Report after resignation.--An independent public
accountant electing resignation shall, within the one business
day following a failure by an issuer to notify the Commission
under paragraph (3), furnish to the Commission a copy of the
accountant's report (or the documentation of any oral report
given).
''(c) Auditor Liability Limitation.--No independent public
accountant shall be liable in a private action for any finding,
conclusion, or statement expressed in a report made pursuant to
paragraph (3) or (4) of subsection (b), including any rules promulgated
pursuant thereto.
''(d) Civil Penalties in Cease-and-Desist Proceedings.--If the
Commission finds, after notice and opportunity for hearing in a
proceeding instituted pursuant to section 21C of this title, that an
independent public accountant has willfully violated paragraph (3) or
(4) of subsection (b) of this section, then the Commission may, in
addition to entering an order under section 21C, impose a civil penalty
against the independent public accountant and any other person that the
Commission finds was a cause of such violation. The determination
whether to impose a civil penalty, and the amount of any such penalty,
shall be governed by the standards set forth in section 21B of this
title.
''(e) Preservation of Existing Authority.--Except for subsection
(d), nothing in this section limits or otherwise affects the authority
of the Commission under this title.
''(f) Definitions.--As used in this section, the term 'illegal act'
means any action or omission to act that violates any law, or any rule
or regulation having the force of law.''.
(b) Effective Dates.--As to any registrant that is required to file
selected quarterly financial data pursuant to item 302(a) of Regulation
S-K (17 CFR 229.302(a)) of the Securities and Exchange Commission, the
amendments made by subsection (a) of this section shall apply to any
annual report for any period beginning on or after January 1, 1994. As
to any other registrant, such amendment shall apply for any period
beginning on or after January 1, 1995.
Financial Fraud Detection and Disclosure Act - Amends the Securities Exchange Act of 1934 to include within statutorily mandated audit requirements specified fraud detection and disclosure procedures to be followed by an independent public accountant.
Authorizes the Securities and Exchange Commission to impose civil penalties for willful violations of this Act by an independent public accountant.