Born of Bitter Debate, PCAOB Gets a Rocky Start
All five members of the new Public Company Accounting Oversight Board (PCAOB) were named, despite a bitter debate at an open meeting of the U.S. Securities and Exchange Commission (SEC). At the core of the controversy were concerns that the new board would start off in a "deep hole," faced with a steep learning curve that would slow the pace of badly needed reforms.
The new board will consist of:
- William H. Webster, chairman for a five-year term expiring in 2007. Mr. Webster is the 78-year-old former head of the Federal Bureau of Investigation and Central Intelligence Agency.
- Daniel L. Goelzer for a four-year term expiring in 2006. Mr. Goelzer is a former SEC General Counsel and a CPA who served on the Touche Ross audit staff early in his career.
- Kayla J. Gillan for a three year term expiring in 2005. Ms. Gillan is a former chief legal adviser to the California Public Employees' Retirement System (CalPERS).
- Willis D. Gradison, Jr. for a two-year term expiring in 2004. Mr. Gradison is a former nine-term Congressman from Ohio.
- Charles D. Niemeier for a one-year term expiring in 2003. Mr. Niemeier is Chief Accountant of SEC's Enforcement division. He is an attorney and a CPA.
Chairman Pitt cast the deciding vote as the other four Commissioners were divided. Two with past ties to accounting firms voted for the slate, despite reports that it resulted from "shameless" lobbying by the accounting profession against more reform-minded candidates. (Prior to joining the SEC, Commissioner Glassman was an economist with Ernst & Young and Commissioner Atkins was an attorney with PricewaterhouseCoopers.)
Two were opposed. Commissioner Goldschmid opposed the entire slate and publicly apologized to the nation, saying the selection process was flawed and the slate of names was not revealed until the morning of the vote. Commissioner Campos voted against the appointment of Mr. Webster as chairman, citing the availability of a better-qualified candidate and the more urgent need for the former FBI/CIA chief's expertise in the area of homeland security. He also cited the possibility of a legal challenge on the grounds that Mr. Webster's background does not conform with the statutory requirements of the Sarbanes-Oxley Act.
In a videotaped interview with CNN's Lou Dobbs, Mr. Webster said he will begin meetings in connection with his new responsibilities this week, and he expects the board will be up and running by the end of April 2003. A replay of the SEC's open meeting is available on the SEC's Web site. Shortly after the SEC vote, Senator Paul Sarbanes added his voice to those calling for Chairman Pitt's resignation.