The U.S. Supreme Court today heard arguments challenging the constitutionality of the Sarbanes-Oxley Act, the law passed in 2002 following the collapse of Enron and the WorldCom and Tyco financial scandals to provide oversight for public companies' accounting practices, including some travel and entertainment expenditures.
The lawsuit, first drafted in 2006 by the nonprofit Free Enterprise Fund and Nevada accounting firm Beckstead and Watts, contends that Sarbanes-Oxley is unconstitutional because of the operations of the Public Company Accounting Oversight Board, the regulating body created by the act. The suit argues that the board has unchecked power in part because its members are appointed by the U.S. Securities and Exchange Commission, not the president.
"Notwithstanding the act's effort to characterize the board as a private corporation, the board is a government entity subject to the limits of the United States Constitution, including the Constitution's separation of powers principles and the requirements of the appointments clause," the lawsuit says. "The board's structure and operation, including its freedom from presidential oversight and control and the method by which its members are appointed, contravene these principles and requirements."
The suit reached the Supreme Court after rulings against it by counts on the federal and appellate levels. The Supreme Court is expected to issue a decision in the next several months.
Sarbanes-Oxley compliance has been a concern of travel and expense managers since its inception, causing some to take a second look at travel policies, reporting and internal expense controls
(BTNonline, Jan. 19, 2004).