Corporate Compliance
Appeals Court Upholds Sarbanes-Oxley Law
Posted Aug 25, 2008, 04:46 am CST
By Debra Cassens Weiss
A federal appeals court in a 2-1 decision has upheld a corporate accountability law passed following the collapse of Enron.
The U.S. Court of Appeals for the D.C. Circuit rejected contentions that the Sarbanes-Oxley law gave too much power to a nonprofit board that oversees accounting firms that audit companies, the Washington Post reports.
The court said in its Aug. 22 opinion (PDF) that the Public Company Accounting Oversight Board created by the law is overseen by the Securities and Exchange Commission “at every significant step.” A dissenter argued the board is "unaccountable and divorced from presidential control to a degree not previously countenanced in our constitutional structure."
Under the law, the board periodically inspects auditing firms, and corporate executives are required to certify corporate financial statements.
Challengers had contended the president did not have enough authority over the board, violating separation of powers and the appointments clause, Legal Times reports.