USA: Supreme Court to consider the constitutionality of the Public Company Accounting Oversight Board

The Public Company Accounting Oversight Board was created by the Sarbanes-Oxley Act (2002) to oversee the auditors of public companies. The PCAOB's duties include registering public accounting firms; establishing auditing, quality control, ethics, independence and other standards relating to public company audits; conducting inspections, investigations and disciplinary proceedings of registered accounting firms; and enforcing compliance with the Sarbanes-Oxley Act (2002).

The constitutionality of the PCAOB was challenged last year in Free Enterprise Fund and Beckstead and Watts LLP v PCAOB et. al., No. 07-5127, 22 August 2008 before the Court of Appeals for the District of Columbia Circuit. It was argued that Sarbanes-Oxley (2002) violated the Appointments Clause of the Constitution and separation of powers because it did not permit adequate Presidential control of the PCAOB. By majority the court rejected these arguments. The case will, however, be heard by the Supreme Court: the Order List for May 18 records that leave to appeal has been granted.