The Free Enterprise Fund's lawsuit targeting Sarbanes-Oxley via the Public Company Accounting Oversight Board has been getting more attention lately.Basically, the law suit claims the PCAOB is in breach of the US constitution because its members are named by the Securities and Exchange Commission and not the president.

But what chances does it have of getting up? And if it does, what does that mean for Sarbanes-Oxley?

I put those questions to Professor Ian Ramsay, the Harold Ford Professor of Commercial Law at The University of Melbourne, Australia. Prof Ramsay is Director of the Centre for Corporate Law and Securities Regulation and is on several Australian Government law committees. Widely published both here and overseas, he is a close observer of Sarbanes-Oxley.

SOX FIRST: What's your assessment of the lawsuit?

IAN RAMSAY: The consensus of people who are knowledgeable in this area, including US constitutional academics, seems to indicate it will fail. It doesn't actually go to the main focus of concern with Sarbanes-Oxley in Section 4504 and particular the costs for smaller companies. The PCAOB by and large hasn't been the cause of substantive criticism by markets in the US, probably for a number of reasons. It took over existing functions. The PCAOB is also part of a global trend to have independent oversight of the audit profession. The third thing is that what the plaintiffs have done is look across the whole spectrum of Sarbanes Oxley and then identify what they perceive to be the weakest link. Should they succeed, it would then go back to Congress for amendment. The idea seems to be that this would be an opportunity for Congress to rethink other parts of Sarbanes-Oxley. That's the strategy if you like.

SOX FIRST: So why has Sarbanes-Oxley run into so much trouble?

IAN RAMSAY: The legislation was put through very quickly. That did not allow time for a proper cost-benefit analysis of the most key provisions of the Act which is necessary when you are implementing changes as sweeping as that. If they had done that, it would have been more robust. A cost benefit analysis would have identified some of the problems that have since emerged.

SOX FIRST: So with Sarbanes-Oxley under so much attack, what future would it have?

IAN RAMSAY: I think it will be there for a very long time. Sarbanes-Oxley is the most sweeping reform of corporate governance which not only affects the US market. Its provisions encompass so many areas of governance. It could not be dismantled that easily.

SOX FIRST: But what of the proposed changes from the SEC's advisory committee recommending that smaller companies be exempted from the internal control provisions of Section 404? Wouldn't that amount to an unwinding of Sarbanes-Oxley?

IAN RAMSAY: We don't know whether the SEC will accept the recommendations. But even if it does, it is only one part of the legislation. Sarbanes-Oxley is so wide and covers so many areas that companies would still be covered by it. As I said, it cannot be that easily dismantled.