New York (Nov. 19, 2002) - Former Securities and Exchange Commission chief accountant Lynn Turner said rebuilding public credibility with regard to accounting reform and wiping out corporate fraud will be a block-by-block building process.
"It's certainly not going to be anything that will happen overnight," Turner told Electronic Accountant. "The past few weeks have done tremendous damage to the SEC and to the new accounting reform board."
Within a span of eight days, SEC chairman Harvery Pitt, chief accountant Robert K. Herdman and William Webster, the newly appointed chairman of the Public Company Accounting Oversight Board -- the reform body mandated by the passage of Sarbanes-Oxley -- resigned.
"What's even worse is the agency became involved in a cover-up and when that happens the public is no longer going to give the benefit of the doubt. The whole process has been inept. In business you check on someone's background before you hire them. Why wouldn't you do it now?"
Prior to his appointment as PCAOB chair, Webster revealed to Pitt that he headed an audit committee at a small Internet company under investigation for fraud. Pitt failed to inform the other SEC commissioners prior to Webster's 3-2 confirmation vote.
Turner suggested the key to restoration and reform should a three-pronged process.
"We have to get an SEC chairman who's intent on making the agency independent again and not bow to pressure from the White House," he said. "Then the agency needs to get the proper funding to do their jobs. With the funding they have now, that's just not possible. Then they have to select a chairman of the board who meets the criteria outlined in Sarbanes-Oxley.
"For the White House it became a question of accounting reform versus campaign finance reform and it was pretty obvious which one was more important to them," Turner said.
-- Bill Carlino
