Today, on the final day of its October 2009 Term, the U.S. Supreme Court, led by Chief Justice John Roberts, amended the Sarbanes-Oxley Act (SOX) while leaving this legislation primarily intact. Based on a 5-4 decision, the Securities and Exchange Commission (SEC) will now be able to remove a member of the Public Company Accounting Oversight Board (PCAOB), which was created by SOX to oversee and investigate accounting firms that audit public companies, at will rather than for cause.
According to Chief Justice Roberts, PCAOB’s original structure violated the Constitutional separation of powers principle. “The president cannot take care that the laws be faithfully executed if he cannot oversee the faithfulness of the officers who execute them,” Chief Justice Roberts wrote.
SOX and its PCAOB are not yet out of the woods though. The pending financial reform package in Congress includes a measure to exempt small businesses from the scope of SOX’s Section 404 (internal control mandates). Stay tuned to NACM’s Credit Real-Time blog, eNews and other publications for the latest developments concerning SOX and the PCAOB.