The Federal Reserve has emerged as the breeding ground for oversight of the accounting profession as Federal Reserve Board Governor Mark W. Olson is taking over as the new chairman of the Public Company Accounting Oversight Board (PCAOB). He becomes the PCAOB’s second permanent chairman, following in the footsteps of the first long-term-chairman William McDonough, who had previously been president of the New York Federal Reserve Bank.
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In appointing Olson, the Securities and Exchange Commission (SEC) passed over Bill Gradison, a former longtime U.S. Congressman from Ohio, who had been acting chairman since McDonough announced his resignation late last year. Gradison, who had reportedly been interviewed for taking on the top slot permanently, will remain a member of the board.
SEC Chairman Christopher Cox said that Olson's broad array of securities, banking and accounting experience make him the ideal candidate for the job.
Olson, 63, joined the Federal Reserve in December 2001 and, in addition to his policy-making duties as a governor, served as the administrative governor since August 2002. He has also served as staff director of the U.S. Senate Securities Subcommittee of the Banking, Housing and Urban Affairs Committee, which oversees the SEC, accounting policy issues and the insurance industry and, from 1988 to 1999, was a partner at Ernst & Young, and national director of the firm's regulatory consulting practice for the financial services industry.
McDonough, who decided to leave the PCAOB partly because of a heavy load of other responsibilities, was appointed board chairman in 2003, following the resignation of inaugural chairman William Webster, who stepped down after a month when it was disclosed he headed the audit committee of a technology company under investigation for accounting irregularities. McDonough, like Olson, also replaced an acting chairman, Charles Niemeier, who had assumed the job from Webster.
At the Fed, Olson specialized in regulatory issues and let others focus on monetary policy, according to the Market Watch news service. His biggest claim to fame as a policy-maker came last September when he voted to keep interest rates steady until the impact of Hurricane Katrina became better known. He stood alone while the rest of the 12-member Federal Open Market Committee voted to raise rates. The Fed has said Olson won't take part in the central bank's June 28-29 meeting about interest rates.
Olson also served a one-year term as president of the American Bankers Association. He began his banking career in 1966 with First Bank System (now U.S. Bancorp) and was named an officer there in 1969. The SEC's announcement noted that he also played a role in the Treasury Department's 1991-92 initiative to assist Eastern European bankers in adapting to a free-market economy.
He takes over during a tumultuous time for the PCAOB. Business interests are lobbying for repeal of internal control provisions for small companies that are mandated under the Sarbanes-Oxley accounting reform law, which created the PCAOB.
Olson, incidentally, brings a new small company perspective to the board. In one press report of his appointment he noted, “My perspective on the board may be unique because during my years in business I worked not on Wall Street or K Street, but on Main Street -- or more accurately on Walnut Street in Cincinnati -- primarily with small investors and smaller corporate pension funds.”