PCAOB case in the WSJ — Kazman quoted

CEI’s Sam Kazman has a great quote on the PCAOB case in James Freeman’s article today in the Wall Street Journal. Although the case, being heard by the Supreme Court this morning,  may seem to deal with an esoteric Constitutional issue of appointments to the Public Company Accounting Oversight Board, Freeman points out the broad effects and costs of this board’s oversight, especially of Section 404 of the Sarbanes-Oxley Act.

The board is charged with making sure that Sarbox’s Section 404 rules on “internal controls” over bookkeeping are implemented. These rules are so onerous that companies have had to undertake exhaustive investigations of such minor issues as how many people should be required to authorize small customer refunds at a retail location.

Freeman concludes with Kazman’s quote and a succinct summary of the problem:

Is all this fuss about board appointments just legal hairsplitting? Sam Kazman, general counsel of the Competitive Enterprise Institute, one of the plaintiffs suing the PCAOB, doesn’t think so. He notes that “responsibility for bureaucrats was a fundamental issue for the Framers,” and that the appointments clause was created “as an essential check on overweening bureaucracy. As colonists of England, they had seen offices created by both the king and Parliament spawn more offices with no accountability, creating what the Declaration of Independence refers to as a ‘multitude of new offices’ and ‘swarms of officers to harass our people and eat out their substance.'”

Today, people who work at public companies-and their investors-understand this problem perfectly.