Title 15, Commerce and TradeRelease 119-110

§7265 Disclosure of Audit Committee Financial Expert

Title 15 › CHAPTER 98 — PUBLIC COMPANY ACCOUNTING REFORM AND CORPORATE RESPONSIBILITY › SUBCHAPTER IV — ENHANCED FINANCIAL DISCLOSURES › § 7265

Last updated Sep 22, 2026|Official source

Summary

The Securities and Exchange Commission must make rules that require companies to say in their regular reports whether their audit committee has at least one financial expert. If a company does not have one, the company must explain why. To decide who is a "financial expert," the SEC must look at a person’s education and work in jobs like public accountant, auditor, chief financial officer, comptroller, or similar roles. The SEC must consider four things: understanding accounting rules and financial statements; experience preparing or auditing similar companies and handling estimates, accruals, and reserves; experience with internal accounting controls; and knowledge of audit committee duties. The SEC had to propose these rules within 90 days after July 30, 2002, and issue final rules within 180 days after July 30, 2002.

Full Legal Text

Title 15, §7265

Commerce and Trade, Source: USLM XML via OLRC

(a)Rules defining “financial expert”

The Commission shall issue rules, as necessary or appropriate in the public interest and consistent with the protection of investors, to require each issuer, together with periodic reports required pursuant to section 78m(a) and 78o(d) of this title, to disclose whether or not, and if not, the reasons therefor, the audit committee of that issuer is comprised of at least 1 member who is a financial expert, as such term is defined by the Commission.

(b)Considerations

In defining the term “financial expert” for purposes of subsection (a), the Commission shall consider whether a person has, through education and experience as a public accountant or auditor or a principal financial officer, comptroller, or principal accounting officer of an issuer, or from a position involving the performance of similar functions—

(1)an understanding of generally accepted accounting principles and financial statements;

(2)experience in—

(A)the preparation or auditing of financial statements of generally comparable issuers; and

(B)the application of such principles in connection with the accounting for estimates, accruals, and reserves;

(3)experience with internal accounting controls; and

(4)an understanding of audit committee functions.

(c)Deadline for rulemaking

The Commission shall—

(1)propose rules to implement this section, not later than 90 days after July 30, 2002; and

(2)issue final rules to implement this section, not later than 180 days after July 30, 2002.

Reference

Citations & Metadata

Citation

15 U.S.C. § 7265

Title 15, Commerce and Trade

Last Updated

Sep 22, 2026

Release point: 119-110