Harvey Pitt Resigns - PCAOB Controversy Continues

Things continue to change very rapidly in the opening days of the new Public Company Accounting Oversight Board. Here are the latest developments in the continuing saga of our government's efforts to protect the public from the accounting misdeeds of corporate America:

  • Harvey Pitt, under fire for failure to disclose to the other SEC Commissioners about William Webster's involvement on the audit committee of US Technologies, a company under investigation for financial fraud, has resigned. The White House quickly accepted his resignation on Election Night eve.

  • The SEC, GAO, and Senate Banking Committee were all planning an investigation prior to Mr. Pitt's announcement last night. It is not yet known if any of these investigations will continue.

  • William Webster, the recently appointed and embattled Chairman of the PCAOB, has indicated that he will stay on the job if he can be effective but will leave if he cannot. "I'm not the only one that can do this job," Webster told the New York Times. "If I conclude my ability to serve impedes on the ability of the board to function, I will step aside."

  • The SEC's General Counsel is reviewing William Webster's conduct during his time as US Technologies audit chairman.

  • BDO Seidman, the CPA firm that was fired by Webster when he was involved as an audit committee member of US Technologies, filed a lawsuit against William Webster for "false and misleading statements" about his knowledge of the financial position of US Technologies.

  • Pension fund executive John Biggs, the Democratic favorite who Webster beat out for the top position at the PCAOB, apparently also was on the audit committee of a company who the SEC has accused of inflating its financial position.

Despite all the furor, the members of the PCAOB will hold their first meeting on November 13 - with or without William Webster - to begin the process of exercising their duty of protecting the public.

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