The Board shall:
1. register public accounting firms;
2. establish, or adopt, by rule, "auditing, quality control, ethics, independence, and other standards relating to the preparation
of audit reports for issuers;"
3. conduct inspections of accounting firms;
4. conduct investigations and disciplinary proceedings, and impose appropriate sanctions;
5. perform such other duties or functions as necessary or appropriate;
6. enforce compliance with the Act, the rules of the Board, professional standards, and the securities laws relating to the
preparation and issuance of audit reports and the obligations and liabilities of accountants with respect thereto; and
7. set the budget and manage the operations of the Board and the staff of the Board.
Auditing standards. The Board would be required to "cooperate on an on-going basis" with designated professional groups of
accountants and any advisory groups convened in connection with standard-setting, and although the Board can "to the extent
that it determines appropriate" adopt standards proposed by those groups, the Board will have authority to amend, modify,
repeal, and reject any standards suggested by the groups. The Board must report on its standard-setting activity to the Commission
on an annual basis.
The Board must require registered public accounting firms to "prepare, and maintain for a period of not less than 7 years,
audit work papers, and other information related to any audit report, in sufficient detail to support the conclusions reached
in such report."
The Board must require a 2nd partner review (concurring review) and approval of audit reports registered accounting firms
must adopt quality control standards.
The Board must adopt an audit standard to implement the internal control review required by section 404(b). This standard
must require the auditor to evaluate whether the internal control structure and procedures include records that accurately
and fairly reflect the transactions of the issuer, provide reasonable assurance that the transactions are recorded in a manner
that will permit the preparation of financial statements in accordance with GAAP, and a description of any material weaknesses
in the internal controls.