116STAT.758 PUBLIC LAW 107-204-JULY 30,2002 resp t to each acco the in et unde prot tion unde thi any act or practice or omission to ac ct by the 0 tha may be n vi 出hsimownqualityeoaolpoiaegbrgoeSomamtaa 品 al iny with re ct t (d)C accounting firm une r this se review ment ents that litig third by various asso arties)pe the firm. nication o that n;an the audit. and quality cont rol ures of the fi s are r ne purpos of the RETENTION the retention publie of the Board accounting for ins ued theret he the Board re to a d inspection. The Board shall take suc with re to such on activities before repo prote part of the inspe and made ion rep116 STAT. 758 PUBLIC LAW 107–204—JULY 30, 2002 (B) not less frequently than once every 3 years with respect to each registered public accounting firm that regu￾larly provides audit reports for 100 or fewer issuers. (2) ADJUSTMENTS TO SCHEDULES.—The Board may, by rule, adjust the inspection schedules set under paragraph (1) if the Board finds that different inspection schedules are consistent with the purposes of this Act, the public interest, and the protection of investors. The Board may conduct special inspec￾tions at the request of the Commission or upon its own motion. (c) PROCEDURES.—The Board 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, or by any associated person thereof, revealed by such inspection that may be in violation of this Act, the rules of the Board, the rules of the Commission, the firm’s own quality control policies, or professional stand￾ards; (2) report any such act, practice, or omission, if appropriate, to the Commission and each appropriate State regulatory authority; 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. (d) CONDUCT OF INSPECTIONS.—In conducting an inspection of a registered public accounting firm under this section, the Board shall— (1) inspect and review selected audit and review engage￾ments of the firm (which may include audit 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 of the firm, as selected by the Board; (2) evaluate the sufficiency of the quality control system of the firm, and the manner of the documentation and commu￾nication of that system by the firm; and (3) perform such other testing of the audit, 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. (e) RECORD RETENTION.—The rules of the Board may require the retention by registered public accounting firms for inspection purposes of records whose retention is not otherwise required by section 103 or the rules issued thereunder. (f) PROCEDURES FOR REVIEW.—The rules of the Board shall provide a procedure for the review of and response to a draft inspection report by the registered public accounting firm under inspection. The Board 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, appro￾priately 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 for each inspection under this section, subject to subsection (h), shall be— VerDate 11-MAY-2000 18:56 Aug 07, 2002 Jkt 099139 PO 00204 Frm 00014 Fmt 6580 Sfmt 6581 E:\PUBLAW\PUBL204.107 APPS24 PsN: PUBL204