SOX Center

Some Accuse SEC of Pushing Accounting Board, Tilting to Business in Rules Process

Complaints are rising that the Securities and Exchange Commission is muscling an accounting oversight board in a tilt toward business interests as the two agencies fashion rules for public companies and auditors under a landmark anti-fraud law.

In recent months the SEC and the independent board that supervises the accounting industry have taken differing approaches toward the key part of the Sarbanes-Oxley law that arose from the 2002 corporate scandals: the requirement for companies to assess the strength of their internal financial controls and to fix any problems.

SEC Chairman Christopher Cox urged, in a letter to the Public Company Accounting Oversight Board last fall, that it revise its rules for outside accountants under the requirement to adapt them to the size of the company whose books are being audited.

Yahoo!:SEC Accused of Muscling Accounting Board

A lobbyist for big business last week vowed to continue challenging the constitutionality of a 2002 anti-fraud law after a federal judge dismissed a lawsuit the group brought against the independent board Congress created to oversee the accounting industry.

The Free Enterprise Fund, which filed the suit in February 2006, argued that the Public Company Accounting Oversight Board violates the Constitution’s mandated separation of powers among the three federal branches because its five members are not appointed by the president, cannot be removed by him and Congress does not control the board’s budget.

delawareonline: Lobbyist pledges to fight Sarbanes-Oxley

Judge Dismisses Lawsuit Challenging Constitutionality of Accounting Oversight Board

A lobbyist for big business on Wednesday vowed to continue challenging the constitutionality of a 2002 anti-fraud law after a federal judge dismissed a lawsuit the group brought against the independent board Congress created to oversee the accounting industry.

The Free Enterprise Fund, which filed the suit in February 2006, argued that the Public Company Accounting Oversight Board violates the Constitution’s mandated separation of powers among the three federal branches because its five members are not appointed by the president, cannot be removed by him and Congress does not control the board’s budget.

But U.S. District Court Judge James Robertson wrote in a 14-page opinion that granted summary judgment in favor of the board that “the plaintiffs have brought a facial challenge to the PCAOB, presenting nothing but an hypothetical scenario of an overzealous or rogue PCAOB investigator.”

Yahoo.com: Judge Dismisses Sarbanes-Oxley Lawsuit

Rep. Barney Frank (D-Mass.) yesterday held out an olive branch to business interests, announcing that he would be open to cooperating on trade, immigration and outsourcing if industry gave ground on union drives, health-care reforms and minimum-wage proposals.

At a briefing to introduce his legislative agenda, Frank, the incoming chairman of the House Financial Services Committee, addressed several hot-button issues, including a mounting push by business interests to slash what they consider burdensome regulations.

The lawmaker said he had met with leaders of the Securities and Exchange Commission and an accounting industry oversight board to urge them to give businesses some relief from a costly audit rule prescribed by the 2002 Sarbanes-Oxley law. Over the next two weeks, the agencies are set to present proposed changes to the rule, which requires that auditors review corporate financial controls to prevent fraud and mistakes.

washingtonpost.com: Frank Offers Compromise to Business

Leaders of the Securities and Exchange Commission and the panel that oversees the accounting industry will meet in an effort to resolve differences over how to overhaul a controversial corporate accountability measure that business groups have targeted as overly expensive.

Tension over a part of the 2002 Sarbanes-Oxley law, which requires companies to review their financial controls and to have auditors pass judgment on them, spilled into public view this week after the release of portions of a letter by SEC Chairman Christopher Cox proposing changes.

The Public Company Accounting Oversight Board, which reviews the work of auditors, met privately for 90 minutes yesterday to consider how to respond to Cox’s letter, which urged the board to be flexible and cost-conscious in response to complaints from businesses. Cox and former Federal Reserve Board official Mark W. Olson, who now leads the accounting panel, are to meet this weekend to discuss the issues.

Washingtonpost.com: SEC, Accounting Board Officials To Weigh Sarbanes-Oxley Update