Two former Securities and Exchange Commission officials who were brought down by the formation of the Public Company Accounting Oversight Board praised its accomplishments last week at the Reuters Corporate Reform Summit in New York.
The two include former SEC Chairman Harvey Pitt, who resigned when it was learned that he kept information from his fellow commissioners when they tapped William Webster to be the first PCAOB chairman. Webster, a former CIA director, chaired the audit committee of a company accused of fraud and resigned less than three weeks into his term. The ensuing flap resulted in Pitt's resignation when it was learned that he had known this information, but had not shared it with other SEC commissioners.
Pitt, who is now the chief executive of consulting firm Kalorama Partners, had praise last week for the Board and the chairman who replaced Webster, William McDonough, former New York Federal Reserve President.
"Based on their initiatives so far, I would give them an 'A,"' Pitt said at the summit. "I think there's still a lot of work to be done. Recognizing that it's a little premature to grade them, I think they are doing what they need to do."
The board, which was created as part of the Sarbanes-Oxley Act, is overseeing wide-scale corporate reform and has been given enormous power to discipline and inspect accountants. It has already completed limited investigations of the Big Four accounting firms, which together audit about 99 percent of the Fortune 500 companies. It will be moving on to more in-depth inspections of the firms in the coming months.
"They've done a good job so far," former SEC Chief Accountant Robert Herdman, who also resigned over the scandal surrounding Webster's selection, said at the summit. "It takes time to set up (a regulatory board)...it was almost as though people thought it would be conjured out of a bottle."