The former chief accountant of the Securities and Exchange Commission said that the accounting profession must stand strong in advocating for more transparent financial disclosure and serve as a model for the rest of the world

Speaking at the New York State Society of CPA's 109th Annual Election Meeting and Dinner, Donald Nicolaisen shared stories of former SEC Chairman William Donaldson cajoling him to join the agency, anecdotes from his weekly commute from New Jersey down to the nation's capital, and of the importance of his work with the Public Company Accounting Oversight Board to implement the Sarbanes-Oxley Act.

Talking about his children and grandchildren, Nicolaisen said the importance of improving financial reporting standards comes down to caring about the well being of future generations.

"We need to get this right, we are a country that invests our assets, whether that's in stocks or in retirement plans," he said. "Our profession, I really hope, comes together to be part of improving what's important to all of us ... We need to work with the profession and those who want to makes this a better world."

The job with the SEC didn't always lead to easy answers -- issues Nicolaisen dealt with included option expensing, Fannie Mae's accounting and the use of off-balance sheet arrangements by corporations -- but he did say that working for the SEC had its perks.

"You have a mission," he said. "For the first time in my life, I didn't have to worry about payroll, or where the dollars for this were coming from. The question was, 'How do I make things better for investors?'"

Nicolaisen also frequently worked with the Financial Accounting Standards Board and other international standard-setters on the convergence of accounting standards. He said that because there have been only one or two instances of publicly reported material deficiencies in the European Union, leading some to believe there's no need for global accounting reform. He noted that the reported rate had been similar in the United States until scandals such as Enron led to regulators taking a closer look.

"I don't want us to go away from that need to trust and to verify," he said of the internal controls testing mandated under SOX. "Especially now that it's beginning to work."

Nicolaisen said the roadmap he left in place when he exited the SEC is still being followed, and made mention of the upcoming challenges around pension, post-employment benefits and lease accounting and wider adoption of Extensible Business Reporting Language -- as well as the increasing din created by hundreds of pieces of Level I accounting guidance floating around the financial world and the question of how useful the varying versions of the standards actually are to investors.

"The status quo of thinking is not where we should be," Nicolaisen said.

A senior partner at PricewaterhouseCoopers Prior before joining the SEC, Nicolaisen left the commission in October 2005 to return to the private sector. Current SEC Chairman Christopher Cox has yet to name a permanent replacement.

Previously on WebCPA:

SEC Names Acting Chief Accountant (Nov. 15, 2005)

SEC's Top Accountant to Leave for Private Sector (Sept. 7, 2005)

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