More than three years after its passage, and months after the largest players in the auditing field have had to face the new meaning of internal controls, the centerpiece of the Sarbanes-Oxley Act -- the creation of the Public Company Accounting Oversight Board -- looks to be facing a court battle that carries some weight.
The Competitiveness Enterprise Institute, a Washington, D.C.-based libertarian think tank and the anti-tax group the Free Enterprise Fund are expected to file papers as soon as today, arguing that the method of filling the five-member PCAOB's seats violates the Constitution.
A CEI white paper, written by Hans Bader, counsel for special projects at the institute, and John Berlau, a fellow in economic policy at the institute, is expected to form the basis for much of the case. In the October 2005 report entitled, "The Public Company Accounting Oversight Board: An Unconstitutional Assault on Government Accountability," the men wrote that the appointments clause requires senior federal officials to be named by the President and confirmed by the U.S. Senate, while the president, the courts or a department head may pick lesser officers.
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