It's What He Didn't Say

For a man of 68, William McDonough, the ebullient chairman of the Public Company Accounting Oversight Board, knows how to adroitly soft-shoe his way through a public relations minefield.

In his “maiden voyage” speaking before the accounting profession at last week’s Sarbanes-Oxley conference, the former Federal Reserve president used just the right tincture of boilerplate to controversy when it came to questions from the audience and the press about exactly what official role SOX has left the AICPA to play.

The chairman liberally sprinkled his CPA debut with standard-issue executive pep-rally phrases such as “tone at the top,” “higher levels,” and “we’re all in this together.”

But when asked for his feedback on the AICPA’s oft-stated intention to become the standard-setter for private companies, McDonough said something to the effect of “The PCAOB and the allies in the profession [i.e. the AICPA] commands a high degree of cooperation.” And, “the AICPA still has an important role in the profession.”

True, to be sure, but probably not quite the indices attendees were looking for. Imagine the response if he had said, “Well, folks, with the passage of Sarbanes-Oxley and the authority the PCAOB now has to set standards, you can be sure the institute will continue to provide insurance and CPE for its members.”

He did, however, reiterate in effect that standards for non-SEC companies were out of the board’s official jurisdiction, and two sets could be a bit confusing. He also alluded to the potential problems that a private company adhering to one set of auditing standards would have should it desire to eventually head to the public markets or, for that matter, visa-versa.

“There will have to be a lot of cooperation or there will be a lot of confusion.”

Now I can’ t speak for the other attendees, but in essence I took that to mean fuggedaboudit!

And in the true sense of its Brooklyn roots.

As the board begins the arduous process of inspecting SEC accounting firms and it begins to feel more at ease with its inaugural mission statement, I can’t see two sets of standards, no matter how convincing a case the institute makes for that undertaking.

McDonough’s inaugural speech to the profession contained just enough authority and not-so-veiled warnings against potential violators that no one, least of all the folks at 1211 Avenue of the Americas, has any doubt as to who’s calling the shots.