SEC names new chair and members of PCAOB

Accounting

The Securities and Exchange Commission has appointed longtime SEC official Erica Y. Williams as the new chair of the Public Company Accounting Oversight Board, and named three new members: Christina Ho, Kara M. Stein and Anthony (Tony) C. Thompson as board members, while allowing Duane DesParte to continue serving as a board member and remaining acting chairperson until Williams is sworn in.

The move comes after a shake-up at the board in June that saw former chair William D. Duhnke III ousted by the SEC (see story). SEC chair Gary Gensler announced plans to replace all the board members, and only DesParte remained after two board members — Megan Zietsman and Rebekah Joshorn Gurata — announced their plans to resign by Oct. 1 (see story). The fifth board member, J. Robert Brown, had departed in January and had not been replaced. The PCAOB has been criticized in recent years for following a deregulatory approach that saw less emphasis on enforcing audit independence rules and engaging with outside advisory groups.

“The PCAOB was formed in response to a crisis of confidence in the corporate disclosures of issuers after the WorldCom and Enron accounting scandals nearly 20 years ago,” Gensler said in a statement Monday. “Finance is about trust, and the PCAOB has a critical role to play in ensuring that public company financial disclosures can be trusted by investors. With these additions to the board, the PCAOB will have the leadership to meet the mission given to it by Congress. Erica, Christina, Kara and Tony have demonstrated deep commitment to public service. They will represent the interests of investors and the public at the PCAOB. I would like to thank Duane DesParte for his valuable service as acting chairperson during the last several months, and I am pleased that he will stay on as a key member of the board.”

Courtesy of the PCAOB

The Sarbanes-Oxley Act of 2002 set up the PCAOB to oversee the audits of public companies and registered broker-dealers through registration, standard-setting, inspection, and disciplinary programs. Under SOX, the SEC selects members and the chair of the board, which is subject to oversight by the SEC.

Williams, the new PCAOB chair, spent over 10 years in various roles at the SEC, including as deputy chief of staff to three former SEC chairs and assistant chief litigation counsel in the SEC’s Division of Enforcement trial unit. She also worked at the SEC’s enforcement division. She had left the SEC to work for the law firm Kirkland & Ellis as a litigation partner and will be leaving the firm to run the PCAOB.

Ho has 28 years of experience in public finance, policy development, accounting and auditing, disclosure modernization, data analytics and technology innovation. Most recently she was vice president of government analytics and innovation at Elder Research. She has also worked as an assistant secretary for financial transparency and accounting policy at the Treasury Department, as controller and CFO at the University of Maryland College Park and as a senior manager with Deloitte & Touche.

Stein was an SEC commissioner from 2013 to 2019. She is currently a professor at the University of Pennsylvania Carey Law School and director of the AI, Data, and Capital Markets Initiative at the Center on Innovation at the University of California Hastings Law.

Thompson is executive director and chief administrative officer of the Commodity Futures Trading Commission, where he oversees the Division of Administration. Before he joined the CFTC in 2011, he held senior positions at the U.S. Department of Agriculture, and previously served in the Air Force for 32 years.

Two SEC commissioners, Hester M. Peirce and Elad M. Roisman, had objected to the ouster of Duhnke by Gensler and two other commissioners in June and the plan to replace the other PCAOB board members, but they gave their qualified support to the new board on Monday. “Today the Securities and Exchange Commission approved a new board of the Public Company Accounting Oversight Board,” they said in a joint statement. “We remain concerned about the Commission’s actions in June, but nevertheless support this new board. The five members are, as the statute requires, ‘prominent individuals of integrity and reputation who have a demonstrated commitment to the interests of investors and the public, and an understanding of the responsibilities for and nature of the financial disclosures required of issuers, brokers, and dealers under the securities laws and the obligations of accountants with respect to the preparation and issuance of audit reports with respect to such disclosures.’ We look forward to working with the new board as they fulfill their mission to improve audit quality, which is crucial to the SEC’s own mission to protect investors and markets.”

The move received other statements of support. “I look forward to working with this new board to further the PCAOB’s vital mission,” SEC acting chief accountant Paul Munter said in a statement issued with the SEC announcement.

The Center for Audit Quality applauded the appointment of the new board. “The Center for Audit Quality strongly believes in the value of an independent PCAOB as a critical component in maintaining strong public company audits in the U.S.,” said CAQ CEO Julie Bell Lindsay in a statement. “We look forward to ongoing dialogue with the new board on issues impacting audit quality.”

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