PCAOB Head Quits, Signaling New Ballgame for Accountants
Former FBI and CIA chief William Webster resigned as chairman of the Public Company Accounting Oversight Board (PCAOB), signaling the start of a whole new ballgame for the accounting profession. The profession is widely blamed by the media for the sequence of events leading to Mr. Webster's rushed appointment as a "moderate" chairman. Many believe his successor will be more of a "hard-line" reformer.
In submitting his resignation, Mr. Webster referred to the events surrounding his brief three-week tenure as a "perfect storm." In a letter addressed to Securities and Exchange Commission (SEC) Chairman Harvey Pitt, he wrote, "Notwithstanding my best efforts to communicate the facts accurately and forthrightly, media interest shows no sign of abatement. I now believe my continued presence on the Board will only generate more distractions, which will not be helpful to the important mission of the Board."
A Different Ballgame
Mr. Webster's resignation comes one week after Chairman Pitt agreed to step down in the heat of a political firestorm over the PCAOB selection process. Washington insiders and accounting experts expect the new SEC and PCAOB chairmen will be more skeptical and adversarial toward the accounting profession. The timing is troublesome for accountants, who are especially vulnerable now that the Sarbanes-Oxley Act has been passed but not yet fully implemented. "This is going to be a very different ballgame. There is a lot of potential for mischief," said Michael Cook, former chairman of Deloitte & Touche. "This is the worst of times in terms of the public's image of the profession."
The profession was blasted by the media for its "shameful lobbying" to block the appointment to the PCAOB of John Biggs, a more outspoken advocate of accounting reforms, such as rotating auditors and strictly separating audit work from consulting. Mr. Cook said that to the degree the profession inspired the opposition to Biggs, it made "a serious mistake." Not only will it be difficult to find a new candidate as knowledgeable and hard working as Mr. Biggs, but the accounting lobby also "managed to finish off Harvey Pitt with the same bullet." ("Accounting Industry Likely to See More Skeptics in Positions of Oversight," Knight-Ridder/Tribune Business News, November 10, 2002.)