Harvey Pitt, chairman of the Securities and Exchange Commission, has backed off on his support for John H. Biggs, chairman of the teachers' pension fund TIAA-CREF, to chair the new accounting oversight board being created as a result of the Sarbanes-Oxley bill. The New York Times is reporting that Mr. Pitt was pressured by lawmakers and accounting industry lobbyists to back off on his recommendation of Mr. Biggs as the board chairman ("S.E.C. Chief Hedges on Accounting Regulator," October 3).
Mr. Biggs has been an outspoken critic of the potential conflicts presented by accounting firms that offer consulting services. "Independent public audit forms should not be the auditors of any company for which they simultaneously provide other services. It's that simple," he said in the summer of 2000 at the SEC hearings on auditor independence. More recently, Mr. Biggs has pushed for accounting for stock options as expenses and has advocated mandatory changes of auditors at public companies every five to seven years.
Mr. Pitt has indicated that he is interviewing "400-plus people" for the chairmanship position. Included on the list are former Nasdaq Chairman Frank Zarb, former Central Intelligence Agency Director William Webster, NASD Vice Chairwoman Mary Shapiro, former Clinton White House chief of staff Leon Panetta, and Dean of the School of Law at Washington University, Joel Seligman. Treasury secretary Paul O'Neill stated on Monday that he expects Mr. Pitt to make a choice for the chairman's position "in the next day or so."
Barbara Roper, director of investor protection at the Consumer Federation of America, commented that she hoped Mr. Pitt would reconsider the appointment of Mr. Biggs and noted the concern of many that Mr. Pitt is bending to the wishes of the accounting profession. "I don't think there is anyone waiting in the wings with the stature of Biggs," she said in an interview. "If Pitt backs away from Biggs, he destroys the credibility of the board. They may as well just let the AICPA appoint the board, and go back to self-regulation." Congressional Democrats have expressed support for Mr. Biggs's appointment, while Republicans have supported Mr. Pitt's decision to reconsider his choice.
Mr. Pitt's original choice for the chairmanship was Paul Volcker, former chairman of the Federal Reserve Board. Mr. Volcker turned down the position because of time demands. The oversight board will have the power to set professional standards for the industry and discipline accountants and their firms.