The PCAOB Goes to Washington... Is Still Useless
Watch the Supreme Court, this might get interesting:
Free Enterprise Fund v. Public Company Accounting Oversight Board, Case No. 08-861 presents the question of whether the PCAOB violates separation of powers principles and the appointment power since it is overseen by the SEC, rather than the President. PCAOB was created in the wake of corporate scandals such as Enron, Worldcom and Global Crossing. PCAOB, supervised by the SEC, was created as part of the Sarbanes Oxley Act. It has broad authority over the auditors of public companies.
Plaintiffs present two constitutional issues in the district court. The first is whether the SOX sections creating the board violate separations of powers principles. The second focus on the appointment clause based on the fact that PCAOB board members are appointed by the SEC, rather than the President. The district court granted summary judgment in favor of the board. The circuit court affirmed as discussed here.
This case has the potential to undo the SOX accounting and auditing reforms. As such, the result may impact not just the auditing profession, but also every public company as well as the users of financial statements of those companies.
Good. Kill the PCAOB, we never needed them anyway. While we're at it, let's pull the plug on the SEC too, or at least leave them sitting in the punishment corner for a few days so they can think long and hard about what they did (or rather, what they didn't).