The next few months are shaping up as a critical time in the life of the post-Enron, post-WorldCom reform agency -- the Public Company Accounting Oversight Board.
Sometime in October, the five-member board, created by the Sarbanes-Oxley Act of 2002 to oversee the auditors of public companies, could be down to two members. And, early next year, the Supreme Court will hear a constitutional challenge to its very existence.
The PCAOB recently announced that founding member Charles Niemeier will leave the board "in the near future." Although Niemeier's term expired Oct. 25, 2008, he continued to serve under a provision that allows board members to remain in office until a successor is appointed. The term of another founding member, William Gradison, expires next month. There currently is one vacancy.
Board members are appointed by the Securities and Exchange Commission. Prior to his appointment to the PCAOB, Niemeier served as the chief accountant of the SEC's Division of Enforcement and co-chair of the SEC's Financial Fraud Task Force. Before joining the SEC, he was a partner at Williams & Connolly in Washington, D.C. Gradison, who has yet to announce any plans to step down when his term expires next month, was unanimously reappointed to a full five-year term in August 2004, and served as acting chairman from December 2005 to July 2006. Before joining the PCAOB, he was senior public policy counselor with Washington's Patton Boggs from 1999 to 2002. Gradison also served in Congress for 18 years and was the ranking member of the House Budget Committee and the Health Subcommittee of the Committee on Ways and Means.
The two other board members are acting Chairman Daniel Goelzer, formerly general counsel of the SEC, and Steven Harris, former staff director and chief counsel of the Senate Banking, Housing and Urban Affairs Committee.
In 2006, the Free Enterprise Fund and a Nevada-based accounting firm filed suit challenging the constitutionality of the PCAOB. The Supreme Court will hear arguments in the new term on whether the creation of the board violates separation of powers and the Constitution's appointments clause. No argument date has been scheduled yet.