The Supreme Court has agreed to hear a challenge to the Sarbanes-Oxley Act (SOX), the 2002 act that established
the Public Company Accounting Oversight Board. Congress passed SOX in response to several high-profile instances of accounting fraud earlier this decade, most notably the Enron collapse.
The board monitors the accounting industry, especially the four largest accounting firms that handle the books for many of the most prominent corporations. The Securities and Exchange Commission chooses the board's members, with consultation by the Fed and the Treasury Department. The Free Enterprise Fund and a small Nevada accounting firm claim
that this arrangement violates the constitutional separation of powers
requirement since the president doesn't have control of the board's
members or their activities, and Congress can't control the board's
The DC Circuit upheld the board's selection process,
saying that past Supreme Court precedent concerning adminsitrative
agencies supported SOX's constitutionality.
Ever since its
passage in 2002, SOX has come under fire by the business world for
imposing cumbersome requirements for accounting and reporting.