Securities and Exchange Commission
Advisory Committee on Improvements to Financial Reporting

By-Laws and Operating Procedures

(As adopted on August 2, 2007)

The following By-Laws and Operating Procedures ("By-Laws") will govern the operations of the Securities and Exchange Commission Advisory Committee on Improvements to Financial Reporting (the "Committee").

Section I: Purpose, Organization and Operation

The purpose of the Committee is to examine the U.S. financial reporting system, with a view to providing specific recommendations as to how unnecessary complexity in that system could be reduced and how that system could be made more useful to investors. The Chairman of the Commission has determined that the establishment of the Committee is in the public interest. The Committee has been formed under the authority of the Federal Advisory Committee Act, 5 U.S.C. App. 2 §§ 1-16, as amended ("FACA"), which governs the creation and operation of advisory committees by federal government agencies, by the filing of its Charter on July 17, 2007 with the Committee on Banking, Housing, and Urban Affairs of the United States Senate and the Committee on Financial Services of the U.S. House of Representatives. Notwithstanding anything to the contrary in these By-Laws, the Committee will operate in accordance with FACA and its implementing regulations, and with its Charter, as the same may be amended from time to time.

Section II: Members and Official Observers

The Members of the Committee are appointed by and serve at the pleasure of the Chairman of the Commission as may be appropriate for the accomplishment of the Committee's purposes and in order to balance the viewpoints required to effectively address those purposes. Membership includes the responsibility to attend Committee meetings personally. The Commission reserves the ability to replace any member who is unable to fully participate in the Committee's meetings. Alternate members will not be permitted to represent those individuals appointed by the Commission without prior written agreement. Official Observers are invited by the Chairman to serve as official observers of the Committee; they also serve at the pleasure of the Chairman. Official Observers have all rights of Members of the Committee except the right to vote or to make a motion for a vote.

Section III: Meetings

(A) In General. The Committee will meet at such intervals as are necessary to carry out its duties. Meetings may be called by the Chairman of the Committee with the approval of the Designated Federal Officer of the Committee appointed in accordance with FACA ("DFO"), or by the DFO. The Chairman of the Committee will preside at all meetings of the Committee, unless the Chairman of the Commission directs the DFO to preside in accordance with FACA. The presiding officer may specify the use of rules of parliamentary procedure consistent with these By-Laws. Subject to such reasonable guidelines and procedures as the presiding officer of the Committee may adopt, Members and Official Observers may participate in a meeting by means of conference telephone or similar communications equipment if all Members and Official Observers can hear one another at the same time and member of the public entitled to hear them can do so.

(B) Notice. The Committee will publish a notice of each meeting in the Federal Register at least 15 calendar days before the meeting. The notice will include (1) the name of the Committee; (2) the time, date, place and purpose of the meeting; (3) a copy or summary of the agenda; (4) a statement as to whether all or part of the meeting will be open to the public and, if any part is closed, a statement as to why, citing the specific statutory provisions that serve as a basis for closure; (5) any notice required by Section III(F) if oral public comment is to be excluded; and (6) the name and telephone number of the DFO or other Commission official who may be contacted for additional information concerning the meeting.

(C) Agenda. The Chairman of the Committee will draft an agenda for each meeting of the Committee sufficiently in advance of the meeting to permit a copy or summary of the agenda to be published with the notice of the meeting, if required. The DFO must approve the agenda before publication, if required. The Commission staff will distribute the agenda to the Members and Official Observers before each meeting. Items for the agenda may be submitted to the Chairman through the DFO by any Member or Official Observer of the Committee or by any member of the public.

(D) Voting. A Member must be participating in a meeting personally, in person or by telephone, to cast a vote. When a decision or recommendation of the Committee is required, the presiding officer will request a motion for a vote. Any Member may make a motion for a vote and vote. No second after a proper motion will be required to bring any issue or recommendation to vote. Committee action based on a vote requires a simple majority of the votes cast at a meeting at which there is a quorum.

(E) Quorum. A quorum will consist of a simple majority of the Members, not including Official Observers.

(F) Open Meetings. Unless otherwise determined in advance, all meetings of the Committee will be open to the public. Once an open meeting has begun, it may not be closed for any reason. If, during the course of an open meeting, matter inappropriate for public disclosure arises during discussion, the presiding officer will order such discussion to cease and will schedule it for closed session. All materials brought before, or presented to, the Committee during an open meeting will be available to the public for review or copying at the time scheduled for the meeting. All such materials also will be available on the Commission's web site as soon as practicable afterwards. The Chairman may decide in advance to exclude oral public comment during a meeting, in which case the meeting announcement published in the Federal Register will note that oral comment from the public will not be permitted and will invite written comment as an alternative. Members of the public may submit written statements to the Committee at any time.

(G) Activities Not Subject to Notice and Open Meeting Requirements. Consistent with FACA regulations, the following activities are excluded from the procedural requirements contained in Sections III(B) and III(F): (a) Preparatory work. Meetings of two or more Committee Members convened solely to gather information, conduct research, or analyze relevant issues and facts in preparation for a meeting of the Committee, or to draft position papers for deliberation by the Committee; and (b) Administrative work. Meetings of two or more Committee Members or subcommittee members convened solely to discuss administrative matters of the Committee or to receive administrative information from a Federal officer or agency.

(H) Closed Meetings.. All or parts of meetings of the Committee may be closed in limited circumstances in accordance with applicable law. Requests for closed meetings must be submitted by the DFO to the Chairman of the Commission under FACA, generally at least 30 days in advance of the meeting. The appropriate Commission official must determine that closing the meeting is consistent with the provisions of the Government in the Sunshine Act. Consistent with Section III(B)(4), the notice of the closed meeting published in the Federal Register must include information on the closure.

(I) Hearings. The Committee may hold hearings to receive testimony or oral comments, recommendations and expressions of concern from the public. The Committee may hold hearings at open meetings or in closed session in accordance with the standards in these By-Laws for closing meetings to the public. The Chairman or the Committee may specify reasonable guidelines and procedures for conducting orderly and efficient hearings, such as requirements for submitting requests to testify and written testimony in advance and placing limitations on the number of persons who may testify and the duration of their testimony.

(J) Minutes. The DFO will prepare minutes of each meeting of the Committee and submit them to the Chairman of the Committee for certification of their accuracy. The DFO will distribute copies of the certified minutes to each Member and Official Observer. Minutes of open or closed meetings will be made available to the public upon request, subject to the withholding of matters about which public disclosure would be harmful to the interests of the Government, industry, or others, and which are exempt from disclosure under the Freedom of Information Act. The minutes will include a record of persons present (including the names of Committee Members and Official Observers, names of Commission and committee staff providing support services to the Committee, and names of members of the public who made written or oral presentations); a complete and accurate description of the matters discussed and conclusions reached; and copies of all reports received, issued or approved by the Committee.

Section IV: Officials

(A) Chairman The Chairman of the Committee is appointed and serves at the pleasure of the Chairman of the Commission to perform the duties specified in these By-Laws. The Committee Chairman will work with the DFO to establish priorities, identify issues that should be addressed, determine the level and types of staff and financial support required and serve as the focal point for the Committee's membership.

(B) Designated Federal Officer. The DFO is designated by the Chairman of the Commission and serves as the Federal Government's agent for matters related to the Committee's activities. By law, the DFO must, among other things, approve or call all meetings of the Committee, approve agendas, attend all meetings, and adjourn meetings when such adjournment is in the public interest. In addition, the DFO is responsible for providing adequate staff support to the Committee, including staff to assist the DFO in the performance of the following functions: (1) notifying Members and Official Observers of the time and place for each meeting; (2) maintaining records of all meetings, including subcommittee meetings, as required by law; (3) maintaining the roll; (4) preparing the minutes of all meetings of the Committee and its subcommittees; (5) attending to official correspondence; (6) maintaining official Committee records, including subcommittee records; (7) maintaining a web site for the Committee; (8) acting as the Committee's agent to collect, validate and pay all vouchers for pre-approved expenditures; and (9) preparing and handling all reports, including the annual report of the Committee required by FACA.

(C) Support Staff. The Chairman of the Commission has agreed that staff from the Commission's Office of the Chief Accountant and other Divisions and Offices as necessary will be available to the DFO to provide adequate staff support for the Committee. The Committee may obtain such other staff or advisory or assistance services appropriate to the goals of the Committee.

Section V: Subcommittees

The Chairman of the Committee, with the approval of the DFO, may convene subcommittees to support the Committee's functions and may appoint Members and Official Observers to, and Chairs of, any subcommittees so convened. The Chairman will be an ex officio member of all subcommittees. Only Members of the Committee will have the right to vote and make a motion for a vote in a subcommittee. No subcommittee will have any authority to provide advice or recommendations (1) directly to the Commission or (2) to be adopted by the Committee without discussion or consideration at an open meeting of the Committee. All activities of the subcommittees will be in compliance with FACA.

Section VI: Records

All documents, reports and other materials prepared by or submitted to the Committee constitute official governmental records and must be maintained in accordance with FACA's policies and procedures.

Section VII: Expenses

Expenses related to the operation of the Committee will be borne by the Commission. Expenditures of any kind must be approved in advance by the DFO.

Section VIII: Amendments

These By-Laws may be amended from time to time by vote of the Members.

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