Court Will Hear PCAOB Constitutionality Case

U.S. Supreme

The U.S. Supreme Court has decided to hear the Free Enterprise Fund’s lawsuit challenging the constitutionality of the Public Company Accounting Oversight Board and, by extension, the Sarbanes-Oxley Act of 2002. The Competitive Enterprise Institute and the FEF are challenging the constitutionality of the PCAOB, which was created by the Sarbanes-Oxley Act. The two say the Appointments Clause of the Constitution requires the officers on the PCAOB to be appointed by the President and confirmed by the Senate.

 

The lawsuit challenging the act was originally filed by the Nevada firm of Beckstead and Watts, that the board accused of performing flawed audits, and the FEF, which calls for limited government. If the plaintiffs are successful, then Congress would likely need to revisit the provision in Sarbox that led to the creation of the PCAOB, opening up the possibility that other parts of the law could be revisited.

 

The American Daily says that “The PCAOB’s interpretation of Sarbanes-Oxley’s section 404 has cost public companies more than $35 billion a year, has proved especially burdensome to smaller public companies, and has cost the economy as a whole over a trillion dollars, according to a Brookings-AEI study.” nIPA