---
kind: "section"
citation: "15 U.S.C. § 7214"
title: "15"
title_heading: "Commerce and Trade"
number: "7214"
heading: "Inspections of registered public accounting firms"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/15/7214"
units:
  - "Chapter 98 — Public Company Accounting Reform and Corporate Responsibility"
  - "Subchapter I — Public Company Accounting Oversight Board"
---

# §7214. Inspections of registered public accounting firms

- (a) **In general—**
  - (1) **Inspections generally—** The [Board](/usc/15/7201.md?p=5) shall conduct a continuing program of inspections to assess the degree of compliance of each [registered public accounting firm](/usc/15/7201.md?p=12) and associated [persons](/usc/15/7a.md?p=6) of that firm with this Act, the [rules of the Board](/usc/15/7201.md?p=13), the rules of the [Commission](/usc/15/7201.md?p=6), or [professional standards](/usc/15/7220.md?p=5), in connection with its performance of [audits](/usc/15/7220.md?p=1), issuance of [audit reports](/usc/15/7220.md?p=2), and related matters involving [issuers](/usc/15/7201.md?p=7).
  - (2) **Inspections of audit reports for brokers and dealers—**
    - (A) The [Board](/usc/15/7201.md?p=5) may, by rule, conduct and require a program of inspection in accordance with [paragraph (1)](#a-1), on a basis to be determined by the [Board](/usc/15/7201.md?p=5), of [registered public accounting firms](/usc/15/7201.md?p=12) that provide one or more [audit reports](/usc/15/7220.md?p=2) for a [broker](/usc/15/7220.md?p=3) or [dealer](/usc/15/7220.md?p=4). The [Board](/usc/15/7201.md?p=5), in establishing such a program, may allow for differentiation among classes of [brokers](/usc/15/7220.md?p=3) and [dealers](/usc/15/7220.md?p=4), as appropriate.
    - (B) If the [Board](/usc/15/7201.md?p=5) determines to establish a program of inspection pursuant to [subparagraph (A)](#a-2-A), the [Board](/usc/15/7201.md?p=5) shall consider in establishing any inspection schedules whether differing schedules would be appropriate with respect to [registered public accounting firms](/usc/15/7201.md?p=12) that issue [audit reports](/usc/15/7220.md?p=2) only for one or more [brokers](/usc/15/7220.md?p=3) or [dealers](/usc/15/7220.md?p=4) that do not receive, handle, or hold customer [securities](/usc/15/7201.md?p=14) or cash or are not a member of the [Securities](/usc/15/7201.md?p=14) Investor Protection Corporation.
    - (C) Any [rules of the Board](/usc/15/7201.md?p=13) pursuant to this paragraph shall be subject to prior approval by the [Commission](/usc/15/7201.md?p=6) pursuant to [section 7217(b) of this title](/usc/15/7217.md?p=b) before the rules become effective, including an opportunity for public notice and comment.
    - (D) Notwithstanding anything to the contrary in [section 7212 of this title](/usc/15/7212.md), a [public accounting firm](/usc/15/7201.md?p=11) shall not be required to register with the [Board](/usc/15/7201.md?p=5) if the [public accounting firm](/usc/15/7201.md?p=11) is exempt from the inspection program which may be established by the [Board](/usc/15/7201.md?p=5) under [subparagraph (A)](#a-2-A).
- (b) **Inspection frequency—**
  - (1) **In general—** Subject to [paragraph (2)](#b-2), inspections required by this section shall be conducted—
    - (A) annually with respect to each [registered public accounting firm](/usc/15/7201.md?p=12) that regularly provides [audit reports](/usc/15/7220.md?p=2) for more than 100 [issuers](/usc/15/7201.md?p=7); and
    - (B) not less frequently than once every 3 years with respect to each [registered public accounting firm](/usc/15/7201.md?p=12) that regularly provides [audit reports](/usc/15/7220.md?p=2) for 100 or fewer [issuers](/usc/15/7201.md?p=7).
  - (2) **Adjustments to schedules—** The [Board](/usc/15/7201.md?p=5) may, by rule, adjust the inspection schedules set under [paragraph (1)](#b-1) if the [Board](/usc/15/7201.md?p=5) finds that different inspection schedules are consistent with the purposes of this Act, the public interest, and the protection of investors. The [Board](/usc/15/7201.md?p=5) may conduct special inspections at the request of the [Commission](/usc/15/7201.md?p=6) or upon its own motion.
- (c) **Procedures—** The [Board](/usc/15/7201.md?p=5) shall, in each inspection under this section, and in accordance with its rules for such inspections—
  - (1) identify any act or practice or omission to act by the [registered public accounting firm](/usc/15/7201.md?p=12), or by any associated [person](/usc/15/7a.md?p=6) thereof, revealed by such inspection that may be in violation of this Act, the [rules of the Board](/usc/15/7201.md?p=13), the rules of the [Commission](/usc/15/7201.md?p=6), the firm’s own quality control policies, or [professional standards](/usc/15/7220.md?p=5);
  - (2) report any such act, practice, or omission, if appropriate, to the [Commission](/usc/15/7201.md?p=6) and each [appropriate State regulatory authority](/usc/15/7201.md?p=1); and
  - (3) begin a formal investigation or take disciplinary action, if appropriate, with respect to any such violation, in accordance with this Act and the [rules of the Board](/usc/15/7201.md?p=13).
- (d) **Conduct of inspections—** In conducting an inspection of a [registered public accounting firm](/usc/15/7201.md?p=12) under this section, the [Board](/usc/15/7201.md?p=5) shall—
  - (1) inspect and review selected [audit](/usc/15/7220.md?p=1) and review engagements of the firm (which may include [audit](/usc/15/7220.md?p=1) engagements that are the subject of ongoing litigation or other controversy between the firm and 1 or more third parties), performed at various offices and by various associated [persons](/usc/15/7a.md?p=6) of the firm, as selected by the [Board](/usc/15/7201.md?p=5);
  - (2) evaluate the sufficiency of the quality control system of the firm, and the manner of the documentation and communication of that system by the firm; and
  - (3) perform such other testing of the [audit](/usc/15/7220.md?p=1), supervisory, and quality control procedures of the firm as are necessary or appropriate in light of the purpose of the inspection and the responsibilities of the [Board](/usc/15/7201.md?p=5).
- (e) **Record retention—** The [rules of the Board](/usc/15/7201.md?p=13) may require the retention by [registered public accounting firms](/usc/15/7201.md?p=12) for inspection purposes of records whose retention is not otherwise required by [section 7213 of this title](/usc/15/7213.md) or the rules issued thereunder.
- (f) **Procedures for review—** The [rules of the Board](/usc/15/7201.md?p=13) shall provide a procedure for the review of and response to a draft inspection report by the [registered public accounting firm](/usc/15/7201.md?p=12) under inspection. The [Board](/usc/15/7201.md?p=5) shall take such action with respect to such response as it considers appropriate (including revising the draft report or continuing or supplementing its inspection activities before issuing a final report), but the text of any such response, appropriately redacted to protect information reasonably identified by the accounting firm as confidential, shall be attached to and made part of the inspection report.
- (g) **Report—** A written report of the findings of the [Board](/usc/15/7201.md?p=5) for each inspection under this section, subject to [subsection (h)](#h), shall be—
  - (1) transmitted, in appropriate detail, to the [Commission](/usc/15/7201.md?p=6) and each [appropriate State regulatory authority](/usc/15/7201.md?p=1), accompanied by any letter or comments by the [Board](/usc/15/7201.md?p=5) or the inspector, and any letter of response from the [registered public accounting firm](/usc/15/7201.md?p=12); and
  - (2) made available in appropriate detail to the public (subject to [section 7215(b)(5)(A) of this title](/usc/15/7215.md?p=b-5-A), and to the protection of such confidential and proprietary information as the [Board](/usc/15/7201.md?p=5) may determine to be appropriate, or as may be required by law), except that no portions of the inspection report that deal with criticisms of or potential defects in the quality control systems of the firm under inspection shall be made public if those criticisms or defects are addressed by the firm, to the satisfaction of the [Board](/usc/15/7201.md?p=5), not later than 12 months after the date of the inspection report.
- (h) **Interim Commission review—**
  - (1) **Reviewable matters—** A [registered public accounting firm](/usc/15/7201.md?p=12) may seek review by the [Commission](/usc/15/7201.md?p=6), pursuant to such rules as the [Commission](/usc/15/7201.md?p=6) shall promulgate, if the firm—
    - (A) has provided the [Board](/usc/15/7201.md?p=5) with a response, pursuant to rules issued by the [Board](/usc/15/7201.md?p=5) under [subsection (f)](#f), to the substance of particular items in a draft inspection report, and disagrees with the assessments contained in any final report prepared by the [Board](/usc/15/7201.md?p=5) following such response; or
    - (B) disagrees with the determination of the [Board](/usc/15/7201.md?p=5) that criticisms or defects identified in an inspection report have not been addressed to the satisfaction of the [Board](/usc/15/7201.md?p=5) within 12 months of the date of the inspection report, for purposes of [subsection (g)(2)](#g-2).
  - (2) **Treatment of review—** Any decision of the [Commission](/usc/15/7201.md?p=6) with respect to a review under [paragraph (1)](#h-1) shall not be reviewable under [section 78y of this title](/usc/15/78y.md), or deemed to be “final agency action” for purposes of [section 704 of title 5](/usc/5/704.md).
  - (3) **Timing—** Review under [paragraph (1)](#h-1) may be sought during the 30-day period following the date of the event giving rise to the review under subparagraph [(A)](#h-1-A) or [(B)](#h-1-B) of paragraph (1).
- (i) **Disclosure Regarding Foreign Jurisdictions That Prevent Inspections—**
  - (1) **Definitions—** In this subsection—
    - (A) the term “covered [issuer](/usc/15/7201.md?p=7)” means an [issuer](/usc/15/7201.md?p=7) that is required to file reports under section [78m](/usc/15/78m.md) or [78o(d)](/usc/15/78o.md?p=d) of this title; and
    - (B) the term “non-inspection year” means, with respect to a covered [issuer](/usc/15/7201.md?p=7), a year—
      - (i) during which the [Commission](/usc/15/7201.md?p=6) identifies the covered [issuer](/usc/15/7201.md?p=7) under [paragraph (2)(A)](#i-2-A) with respect to every report described in [subparagraph (A)](#i-1-A) filed by the covered [issuer](/usc/15/7201.md?p=7) during that year; and
      - (ii) that begins after December 18, 2020.
  - (2) **Disclosure to Commission—** The [Commission](/usc/15/7201.md?p=6) shall—
    - (A) identify each covered [issuer](/usc/15/7201.md?p=7) that, with respect to the preparation of the [audit report](/usc/15/7220.md?p=2) on the financial statement of the covered [issuer](/usc/15/7201.md?p=7) that is included in a report described in [paragraph (1)(A)](#i-1-A) filed by the covered [issuer](/usc/15/7201.md?p=7), retains a [registered public accounting firm](/usc/15/7201.md?p=12) that has a branch or office that—
      - (i) is located in a foreign jurisdiction; and
      - (ii) the [Board](/usc/15/7201.md?p=5) is unable to inspect or investigate completely because of a position taken by an authority in a foreign jurisdiction, as determined by the [Board](/usc/15/7201.md?p=5); and
    - (B) require each covered [issuer](/usc/15/7201.md?p=7) identified under [subparagraph (A)](#i-2-A) to, in accordance with the rules issued by the [Commission](/usc/15/7201.md?p=6) under [paragraph (4)](#i-4), submit to the [Commission](/usc/15/7201.md?p=6) documentation that establishes that the covered [issuer](/usc/15/7201.md?p=7) is not owned or controlled by a governmental entity in the foreign jurisdiction described in [subparagraph (A)(i)](#i-2-A-i).
  - (3) **Trading prohibition after 2 years of non-inspections—**
    - (A) **In general—** If the [Commission](/usc/15/7201.md?p=6) determines that a covered [issuer](/usc/15/7201.md?p=7) has 2 consecutive non-inspection years, the [Commission](/usc/15/7201.md?p=6) shall prohibit the [securities](/usc/15/7201.md?p=14) of the covered [issuer](/usc/15/7201.md?p=7) from being traded—
      - (i) on a national [securities](/usc/15/7201.md?p=14) exchange; or
      - (ii) through any other method that is within the jurisdiction of the [Commission](/usc/15/7201.md?p=6) to regulate, including through the method of trading that is commonly referred to as the “over-the-counter” trading of [securities](/usc/15/7201.md?p=14).
    - (B) **Removal of initial prohibition—** If, after the [Commission](/usc/15/7201.md?p=6) imposes a prohibition on a covered [issuer](/usc/15/7201.md?p=7) under [subparagraph (A)](#i-3-A), the covered [issuer](/usc/15/7201.md?p=7) certifies to the [Commission](/usc/15/7201.md?p=6) that the covered [issuer](/usc/15/7201.md?p=7) has retained a [registered public accounting firm](/usc/15/7201.md?p=12) that the [Board](/usc/15/7201.md?p=5) has inspected under this section to the satisfaction of the [Commission](/usc/15/7201.md?p=6), the [Commission](/usc/15/7201.md?p=6) shall end that prohibition.
    - (C) **Recurrence of non-inspection years—** If, after the [Commission](/usc/15/7201.md?p=6) ends a prohibition under subparagraph [(B)](#i-3-B) or [(D)](#i-3-D) with respect to a covered [issuer](/usc/15/7201.md?p=7), the [Commission](/usc/15/7201.md?p=6) determines that the covered [issuer](/usc/15/7201.md?p=7) has a non-inspection year, the [Commission](/usc/15/7201.md?p=6) shall prohibit the [securities](/usc/15/7201.md?p=14) of the covered [issuer](/usc/15/7201.md?p=7) from being traded—
      - (i) on a national [securities](/usc/15/7201.md?p=14) exchange; or
      - (ii) through any other method that is within the jurisdiction of the [Commission](/usc/15/7201.md?p=6) to regulate, including through the method of trading that is commonly referred to as the “over-the-counter” trading of [securities](/usc/15/7201.md?p=14).
    - (D) **Removal of subsequent prohibition—** If, after the end of the 5-year period beginning on the date on which the [Commission](/usc/15/7201.md?p=6) imposes a prohibition on a covered [issuer](/usc/15/7201.md?p=7) under [subparagraph (C)](#i-3-C), the covered [issuer](/usc/15/7201.md?p=7) certifies to the [Commission](/usc/15/7201.md?p=6) that the covered [issuer](/usc/15/7201.md?p=7) will retain a [registered public accounting firm](/usc/15/7201.md?p=12) that the [Board](/usc/15/7201.md?p=5) is able to inspect under this section, the [Commission](/usc/15/7201.md?p=6) shall end that prohibition.
  - (4) **Rules—** Not later than 90 days after December 18, 2020, the [Commission](/usc/15/7201.md?p=6) shall issue rules that establish the manner and form in which a covered [issuer](/usc/15/7201.md?p=7) shall make a submission required under [paragraph (2)(B)](#i-2-B).

## Source credit

(Pub. L. 107–204, title I, § 104, July 30, 2002, 116 Stat. 757; Pub. L. 111–203, title IX, § 982(e)(1), July 21, 2010, 124 Stat. 1929; Pub. L. 116–222, § 2, Dec. 18, 2020, 134 Stat. 1063; Pub. L. 117–328, div. AA, title III, § 301, Dec. 29, 2022, 136 Stat. 5536.)

## Notes

### Editorial Notes

### References in Text

This Act, referred to in subsecs. (a)(1), (b), and (c), is Pub. L. 107–204, July 30, 2002, 116 Stat. 745, known as the Sarbanes-Oxley Act of 2002. For complete classification of this Act to the Code, see Tables.

### Amendments

2022—Subsec. (i)(2)(A)(ii). Pub. L. 117–328, § 301(1), substituted “a foreign jurisdiction” for “the foreign jurisdiction described in clause (i)”.

Subsec. (i)(3). Pub. L. 117–328, § 301(2)(A), substituted “2” for “3” in heading.

Subsec. (i)(3)(A). Pub. L. 117–328, § 301(2)(B), substituted “2” for “3”.

2020—Subsec. (i). Pub. L. 116–222 added subsec. (i).

2010—Subsec. (a). Pub. L. 111–203 designated existing provisions as par. (1), inserted heading, and added par. (2).

### Statutory Notes and Related Subsidiaries

### Effective Date of 2010 Amendment

Amendment by Pub. L. 111–203 effective 1 day after July 21, 2010, except as otherwise provided, see section 4 of Pub. L. 111–203, set out as an Effective Date note under section 5301 of Title 12, Banks and Banking.