Sarbanes-Oxley enforcement is going to look a little different soon, thanks to a Supreme Court decision ruling that aspects of the Public Company Accounting Oversight Board are unconstitutional.

According to a report from AccountingWeb, the U.S. Supreme Court reached its decision on June 28, 2010. The case stemmed from a 2006 lawsuit filed against the PCAOB, which enforces the 2002 Sarbanes-Oxley Act, claiming that the appointment of PCAOB officials violates the separation of powers principle.

PCAOB members were previously chosen by the Securities and Exchange Commission and could only be removed with good cause. The plaintiffs in the original lawsuit believe that, as a government agency, board members should be appointed by the president, who should also have authority to remove them.

The Supreme Court agreed with the plaintiffs that the PCAOB needed more accountability. In a 5-4 decision, the justices determined that board members should be able to be removed at any time. While the board will retain its enforcement power, members now serve at will of the SEC, which serves at will of the president.

"With this cloud of uncertainty lifted, the PCAOB can devote more of its attention to independently protecting the public at the federal level,” says David A. Costello, CPA, president and CEO of The National Association of State Boards of Accountancy.

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