The Supreme Court is set to rule soon on a case that could theoretically invalidate the PCAOB and (potentially) all of Sarbanes-Oxley. This month’s Journal of Accountancy has an article that does a great job laying out what is at stake.
Because the Sarbanes-Oxley Act (SOX) does not contain a severability clause, a provision that allows one part of a law to be struck down while keeping the other provisions in force, some observers have pointed out that the entire law could be invalidated by the Supreme Court, which would eliminate the funding of FASB under SOX section 109 and regulations regarding internal control over financial reporting under section 404.
I can’t imagine a scenario in which the courts would strike down all of Sarbanes-Oxley. Section 404 has been so integrated into company’s financial reporting processes and accounting firm’s audit programs, it truly is unthinkable. However, stranger things have happened…
