After six years of survival, could a constitutional technicality derail the far-reaching Sarbanes-Oxley Act?
At issue is a case before the U.S. Court of Appeals in Washington, D.C. that challenges the constitutionality of the Public Company Accounting Oversight Board. The PCAOB was set up by the Sarbanes-Oxley Act (SOX) to set up better accounting standards for companies and enforce them.
Although controversial, the PCAOB has played an integral role in toughening accounting standards for publicly-held companies and providing better, more transparent financial statements to the advantage of investors, boards and management alike.
The court challenge, columnist Jane Bryant Quinn writes, is a technical one having to do with the constitutionality of having the U.S. Securities & Exchange Commission, which works hand in glove with the PCAOB in enforcing SOX, to appoint PCAOB members. Perhaps, the U.S. President should be making the picks, lawsuit plaintiffs argue.
What happens if the PCAOB is found to be unconstitutional? According to Quinn, a stay might be put in place so the U.S. Supreme Court can hear the case. But if it goes further and Congress does nothing corrective, all of SOX might become unraveled. Imagine all the millions of consulting fees and PowerPoint presentations that would likewise evaporate.
All that work, for nothing.
