Yeeeeeeah the Supreme Court Goes For PCAOB Scalps!? Not Really...
No one has offered me Fedkabobs lately so I'll totally take the "Constitutionality" of the PCAOB.
I'm not going to be one of those ironic assholes who talks a lot about the Constitution but hasn't read it since it was mandatory memorization in 8th grade so let's leave that alone for now.
WaPo (don't trip, the accounting reaction comes later):
Supreme Court justices tangled Monday over whether an accounting oversight board established by Congress to make sure there were "no more Enrons" violates the president's executive power.
It is not the chief executive who is complaining -- both President Obama and his predecessor George W. Bush approved of the creation of the board, even without the ability to appoint or dismiss its members.
But the Public Company Accounting Oversight Board, sometimes called "peek-a-boo," is at the heart of a constitutional question about the separation of powers.
Though it is an agency in the executive branch, Justice Samuel A. Alito Jr. said: "As a practical matter, does the president have any ability to control what the board does?"
What does practicality have to do with the PCAOB? That was never a factor. If it had been at any point in the brilliant engineering of the SEC's most useless tentacle in history, so many resources wouldn't chase so few results.
No more Enrons give me a fucking break, how about no more Citigroups?
I can't pretend to know law either, though I saw a "Constitutional Law" book in the basement of my office once I think.
How about (Professor Bainbridge):
The Supreme Court today is hearing oral argument in a lawsuit challenging the constitutionality of the Public Company Accounting Oversight Board. Because the Sarbanes-Oxley Act, which created the PCAOB, contains no severance clause, the case creates a possibility that the entire Act may be invalidated.
For my op-ed on the case go here. For the amicus brief I co-signed, go here
SCOTUSblog has links to lots of key documents and backgrounders, and also offers up a podcast debate beween supporters and opponents of the suit.
James Freeman uses the occasion to advance an argument that "the costs of this legislation far outweigh its benefits to the investing public." The difficulty I have with this argument is that the benefits of the legislation are so hard to quantify. At the end of the day, however, my educated guess is that Freeman's right.
Um, they are lying to us? (Open Market):
The members of the Public Company Accounting Oversight Board (PCAOB), an agency being challenged in the Supreme Court on December 7, aren’t appointed by the President, nor can he remove them. The General Accounting Office describes the PCAOB as “an independent board with sweeping powers and authority;” its rules and red tape cost the economy billions of dollars every year (with an long-term cost of perhaps $1 trillion).
Yet the Government suggests in its brief that the President has “fully effective control” over the PCAOB (see pg. 46 of that brief). That’s not the only peculiar claim made in the PCAOB’s defense.
Edith Orenstein covered it at FEI as well.
Naturally, Tom at Accounting Onion went off about similar shit that of course ties into the uselessness of our friends at the PCAOB:
I had only a few weeks ago expressed my glee that requiring smaller public companies to comply with S-OX 404(b) might soon be trashed. I had previously observed that S-OX 404(b) attestations have appeared to devolve into a go-through-the-motions exercise. Those suspicions are validated to some extent by a recent ruling against defendant Deloitte on a motion for summary judgment in a lawsuit alleging that Deloitte failed to adequately report on internal control deficiencies at WAMU. Jim Peterson of the Re: Balance blog avidly follows the solvency tightrope that each of the Big Four is walking as they try to fend off litigation arising out of 'traditional' public company audits. His view is that auditors should walk away from S-OX 404(b) work while they are still ahead.
So I could keep going but you and I both know that everything I pull is going to show that the PCAOB is a) worthless b) worse than worthless by costing BILLIONS in wasted energy, effort, and capital.
The PCAOB did not return my email months back when I gave at least one of them the opportunity to comment in their defense.