After filling the top slot at the Public Company Accounting Oversight Board by naming Mark W. Olson as chairman in June, Securities and Exchange Commission chair Christopher Cox filled another gaping vacancy in July - the position of SEC chief accountant.Late last month, Cox named former Ernst & Young partner and California banking regulator Conrad W. Hewitt as the nation's top accountant, a post that had been empty for nearly 10 months since the departure of Don Nicholaisen.
"I'm delighted to once again have the opportunity for public service to protect investors," said Hewitt. "My experience as the chairman of several public company audit and compensation committees, during which I worked directly with the nation's largest auditing firms to implement the provisions of the Sarbanes-Oxley Act in the private sector, has given me great respect" for the PCAOB.
Hewitt was due to begin his tenure Aug. 18.
"I think what Conrad brings is balance," said Dennis Beresford, the former chairman of the Financial Accounting Standards Board and now a professor of accounting at the University of Georgia. Beresford worked with Hewitt at the Los Angeles office of Ernst & Ernst, the predecessor to E&Y. "He's not a national-office-type of guy, but rather real hands-on. He's served as a banking regulator and as a member of a number of audit committees, so that gives him a good background in regulation. It also gives him a bit better perspective balancing the rules against the practical. Right now, there's a major issue of complexity with regard to accounting rules, and Con has seen that first hand."
Until 1995, Hewitt, 69, was a managing partner at E&Y. He spent more than 30 years with Ernst, working in Honolulu, the Pacific Northwest and northern California. After leaving the audit firm, Hewitt served as Commissioner of the Department of Financial Institutions and Superintendent of Banking for the State of California, from 1997 to 1998, and 1995 to 1997, respectively. He also is a director of North Bay Bancorp and Spectrum Organic Products Inc.
Some observers opined that Hewitt comes in at a time of sweeping change at the SEC.
"They [the SEC] are at a crossroads right now," said Michael Young, a securities law specialist and partner at the New York law firm of Willkie Farr & Gallagher. "The underlying theme to financial reporting is change. You're seeing that at FASB, the PCAOB, the SEC, and internationally. The question is, 'In which direction are we going?' The challenge [for the new chief accountant] is to what extent are accounting judgment calls going to be second-guessed after the fact."
In related news, Kathleen Casey was sworn in as an SEC commissioner, filling the slot left by Cynthia Glassman. Her term expires in 2011.
