Sarbanes-Oxley Act section 802: retention of audit and review workpapers and records by an accountant who audits an issuer

Section 1520(a)(1) requires any accountant who conducts an audit of an issuer of securities to which section 10A(a) of the Securities Exchange Act of 1934 applies to maintain all audit or review workpapers for a period of 5 years from the end of the fiscal period in which the audit or review was concluded.

Section 1520(a)(2) directs the Commission to promulgate rules and regulations relating to the retention of relevant records such as workpapers, documents that form the basis of an audit or review, memoranda, correspondence, communications, other documents, and records, including electronic records.

Rule 2-06 of Regulation S-X requires the accountant to retain, for a period of seven years after concluding an audit or review of an issuer's financial statements, records relevant to the audit or review, including workpapers and other documents that form the basis of the audit or review.

The records include memoranda, correspondence, communications, other documents, and records, including electronic records, that are created, sent or received in connection with the audit or review and contain conclusions, opinions, analyses, or financial data related to it.

For the rule, workpapers means documentation of auditing or review procedures applied, evidence obtained, and conclusions reached by the accountant in the audit or review engagement, as required by standards established or adopted by the Commission or by the Public Company Accounting Oversight Board.

The accountant must retain those records whether they support the auditor's final conclusions or contain information or data, relating to a significant matter, that is inconsistent with the auditor's final conclusions regarding that matter or the audit or review. The records include those documenting a consultation on or resolution of differences in professional judgment. The rule defines an issuer by reference to section 10A(f) of the Securities Exchange Act of 1934.

A person who knowingly and willfully violates section 1520(a)(1), or a rule or regulation the Commission promulgated under section 1520(a)(2), is fined under title 18, imprisoned not more than 10 years, or both. Section 1520 does not diminish or relieve any person of any other duty or obligation imposed by Federal or State law or regulation to maintain, or refrain from destroying, any document. Section 1520 was added to title 18 by section 802(a) of the Sarbanes-Oxley Act, enacted July 30, 2002. The Commission's Rule 2-06 took effect on March 3, 2003, with a compliance date of October 31, 2003.