Audit firms of ETFs and mutual funds, as well as other issuers of public securities, are required to be registered with the Public Company Accounting Oversight Board (PCAOB) and are subject to inspection by the PCAOB. In Free Enterprise Fund (FEF) and Beckstead and Watts, LLP v. PCAOB and United States of America, FEF claimed that the PCAOB was unconstitutional.
While the Supreme Court in that case held that the restriction on removal of PCAOB Board members under the Sarbanes-Oxley Act of 2002 violates separation of powers principles, it found that the provision was severable from the remainder of the Sarbanes-Oxley Act. As a consequence, the Court stated that the Act "remains fully operative as a law" with the for-cause restrictions excised, leaving the members of the PCAOB subject to removal by the SEC without restriction. The opinion does not call into question any action taken by the PCAOB since its inception.
The Sarbanes-Oxley Act of 2002 established the PCAOB, and the Act provides the SEC with oversight authority over the PCAOB. The PCAOB's auditing standards, as approved by the SEC, continue to apply.