Little Change for PCAOB Under High Court Ruling

Little Change for PCAOB Under High Court Ruling

The Supreme Court’s 5–4 decision Monday in the constitutional challenge to the PCAOB will leave the agency virtually unchanged. The court’s ruling will not affect day-to-day operations of the PCAOB, the agency said.

Chief Justice John Roberts wrote the majority opinion. In it, he said the court was isolating, or “severing,” from the rest of the Sarbanes-Oxley Act the one constitutional flaw the court found regarding the power to remove PCAOB members. “The consequence is that the [PCAOB] may continue to function as before, but its members may be removed at will by the [SEC],” said the Court’s summary of the decision.

The court also emphasized that all other provisions of the SOX will remain in effect. “The Sarbanes-Oxley Act remains ‘fully operative as a law’ with these tenure restrictions excised,” the court said.

“The decision effectively fixes the constitutionality of the PCAOB by making board members subject to ‘at will’ removal by the SEC and therefore the president,” said AICPA President and CEO Barry Melancon. “It sustains the continued function of both the PCAOB and Sarbanes-Oxley.”