Sarbox Takes a Constitutional

Harvey Pitt, who was SEC chairman when the PCAOB was established, disputes Bader's notion that the accounting board is a federal department. The members of the board "aren't high-level enough" for PCAOB to qualify as a department, he insists, adding that the President has many more important things on his agenda than regulating the public-accounting industry.

Pitt, now the chief executive officer of Washington-based consultancy Kalorama Partners, also advises the plaintiffs to "be careful what you wish for." Should the lawsuit succeed, he observes, the PCAOB — which is funded primarily by assessments on public corporations — might be replaced by a taxpayer-financed federal agency. "I don't think anybody in their right mind thinks that the PCAOB should be funded by general tax revenues," he says.

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