The U.S. Court of Appeals for the District of Columbia Circuit rejected a lawsuit that challenged the creation of a non-profit board to set auditing requirements and police the accounting firms that audit public companies, The Washington Post reported Friday.

The three-judge panel's 2-1 decision can be appealed to the full court of appeals or directly to the U.S. Supreme Court, the newspaper said.

Judge Judith Rogers, writing the majority opinion, said the Supreme Court has upheld the constitutionality of independent agencies. She said the law "vests a broad range of duties" in the accounting oversight board, but the "exercise of those duties is subject to check" by the U.S. Securities and Exchange Commission "at every significant step."

Judge Brett Kavanaugh dissented, writing that the accounting oversight board is "unaccountable and divorced from Presidential control to a degree not previously countenanced in our constitutional structure."

Sarbanes-Oxley was enacted following accounting scandals involving such U.S. firms as Enron and WorldCom. It was designed to make corporate executives more accountable and audits more reliable.