Ronald R. King, senior associate dean and professor of accounting at Olin Business School, is available for comment on case before the Supreme Court today: Free Enterprise Fund and Beckstead & Watts, LLP, Petitioners v. Public Company Accounting Oversight Board.
See exerpts below from King’s paper on the case, “The PCAOB meets the Constitution: The Supreme Court to decide on PCAOB’s conformity with the Separation of Powers Doctrine and Appointments Clause“.
King bio: http://www.olin.wustl.edu/facultyandresearch/Faculty/Pages/FacultyDetail.aspx?username=king
King is available for interview by phone, ISDN or VYVX broadcast quality lines from a studio on campus.
CONTACT: Melody Walker
tel: 314-941-2046
King comments on the case:
“The Supreme Court’s decision about the constitutionality of the PCAOB is important because of its potential impact on (1) the future of auditing oversight, (2) the validity of the Sarbanes-Oxley Act (SOX) of 2002 and (3) the future of Congressional ability to establish independent agencies in general.
Several repercussions are expected if the Supreme Court upholds the D.C. Circuit’s decision that the PCAOB is constitutional as this decision would allow the Board and SOX to continue as they have to date.
This outcome has other related implications. First, such as ruling would give a green light to Congress to establish an array of independent agencies with regulators who have the double for-cause removal architecture. This would introduce a set of independent agencies that are more insolated from executive oversight than previous agencies. Some argue that this would affect the relative power of the legislative branch of the U.S. government relative to the executive branch.
Second, Nagy (2005) argues that such architecture creates the possibility of an asymmetric situation where the executive and legislative branches take political credit with regulatory successes and on the other hand can shed blame when the regulator pursues unpopular or misguided policies. This creates the possibility of the lack of stability of regulatory regimes and thus making it more difficult for citizens to determine how to plan and operate given the uncertainty of the regulatory oversight.
On the other hand, if the Supreme Court finds the PCAOB to be unconstitutional, the possible implications apply to both the current set of independent agencies and the oversight of auditing. Some have argued that this could have very dramatic consequences, possibly leading to the conclusion that SOX in its entirety is unconstitutional because the law does not have a severability clause.”