The US Supreme Court decision on the constitutionality of the Public Company Accounting Oversight Board (PCAOB) is a victory for investors and the accounting profession, according to Barry Melancon.
The American Institute of Certified Public Accountants president and chief executive was one of many industry leaders welcoming this week’s ruling.
The Supreme Court decision means PCAOB members can be removed by the US Securities and Exchange Commission (SEC) at will. The Sarbanes-Oxley Act (SOX), which created the PCAOB, stated that board members could only be removed for good cause.
All other aspects of the SEC’s oversight, the structure of the PCAOB and its programmes including registration, inspection, enforcement, and standard-setting activities are unaffected by the decision.
PCAOB acting chairman Daniel Goelzer said the board is pleased with the decision.
“The decision allows the PCAOB to continue without interruption to carry out its important mission of overseeing public company audits in order to protect investors and promote the public interest,” Goelzer said.
SEC chair Mary Schapiro said she was pleased with the decision to allow the PCAOB’s operations to continue and the Sarbanes-Oxley Act (SOX), with its tenure restrictions excised, to remain fully in effect.
“We look forward to continuing to work with the PCAOB in connection with its mission to oversee auditors in order to protect the interests of investors and further the public interest in the preparation of informative, accurate and independent audit reports,” Schapiro said
SEC chief accountant James Kroeker added the PCAOB’s auditing standards as approved by the SEC will continue to apply. Audit firms are still required to be registered with the PCAOB and they are still subject to PCAOB inspections.
SOX co-authors Paul Sarbanes and Michael Oxley issued a joint statement in support of the PCAOB.
“The PCAOB provides essential protections to the more than half of American households that invest savings in securities. It ensures the integrity of public company audits and, thereby, the accuracy of financial reporting. The PCAOB enjoys widespread support from investors as well as from the accounting profession, Sarbanes and Oxley said.
“The decision from the Supreme Court adjusts the law in a way that allows the PCAOB to continue to ensure the integrity of public company audits. The board’s essential protections of American investors will continue.”