PCAOB board member Kaiser departs, chief auditor Zietsman takes his place
James Kaiser, a member of the Public Company Accounting Oversight Board since 2018, is leaving the PCAOB and will be replaced by chief auditor Megan Zietsman in another sign of turmoil at the group overseeing auditing standards and audit firm inspections.
Kaiser was one of a group of all new board members brought to the PCAOB in an effort to shake up the board, some of whose former members had served for nearly a decade. Officially the board members are appointed to staggered five-year terms by the Securities and Exchange Commission, but the slate of board members tapped by the SEC in late 2017 to serve with PCAOB chairman William Duhnke inherited partial terms. One of the board members, Kathleen Hamm, was replaced last year by a former White House aide, Rebekah Goshorn Jurata (see story).
Hamm had expressed a desire to stay on for another term before her partial term ended. In contrast, Kaiser announced in June that he planned to retire once his term ended in October. The SEC began seeking candidates to fill his position, which is one of two CPA slots set aside on the board.
Many of the other top officials at the PCAOB have also departed in recent years and the board has held few public meetings since the new board took over, including with its Standing Advisory Group and Investor Advisory Group. That prompted questions from some Senate Democrats concerned about political interference and a deregulatory mindset at the SEC and the Trump administration. Insiders have expressed concern about the ties of several PCAOB board members and officials to Sen. Richard Shelby, R-Alabama, chairman of the Senate Appropriations Committee, and SEC chairman Jay Clayton. Board member positions at the PCAOB are sought after for their high pay of $550,000 per year for regular board members, and $670,000 for the chairman post.
Kaiser was appointed by the SEC in Dec. 2017 and began his term in March 2018. He is a CPA who joined the PCAOB after retiring from PricewaterhouseCoopers after 38 years, including 28 years as an audit partner. His term was set to end this month. At the time he was appointed, Kaiser was the first auditor from a Big Four firm appointed to the PCAOB, which was established by the Sarbanes-Oxley Act of 2002 in the wake of a series of accounting scandals in the early 2000s at companies like Enron and WorldCom.
The PCAOB has in the past reappointed many of its members to serve for more than one term or extended their terms, but like Hamm, Kaiser’s tenure ended after less than a full term. During that time, however, he spoke frequently at accounting conferences alongside fellow board member Duane DesParte. He was also heavily involved in setting the new strategic plan for what’s been dubbed “PCAOB 2.0” and for promoting the use of audit technology.
“It has been an honor to serve investors and the public interest,” Kaiser said in a statement Thursday. “I am proud of the many accomplishments we have made to advance our strategic plan and enhance audit quality during my term. We have increased our stakeholder engagement, improved our inspections process and reporting, and developed a plan to technology-enable the PCAOB.”
His successor, Megan Zietsman, has been chief auditor and director of professional standards of the PCAOB since February 2019. Before joining the PCAOB, she was a partner in Deloitte & Touche LLP's professional practice network in the U.S. She also served on the American Institute of CPAs’ Auditing Standards Board from 2007 to 2011, and on the International Auditing and Assurance Standards Board from 2014 to 2019, most recently as deputy chair of the IAASB. She has 31 years of experience in auditing.
This week, another PCAOB board member, J. Robert Brown, released a statement criticizing the PCAOB for ignoring the strategic plan in removing a number of projects from its standard-setting and research agendas and for proposing to rely on an IAASB quality control standard as the starting point for revising its own audit quality control standard (see story). “The revised agendas do not adequately explain the reasons for the removal of these items or include any discussion of how investor concerns that caused them to be added to the agendas in the first place were addressed,” he wrote. “Moreover, their removal and relegation to a status of ‘monitor[ing] relevant developments’ is problematic in light of the particular importance of these areas in an economic environment deeply impacted by the continuing pandemic.”
Zietsman said she would protect investor interests at the board. "The PCAOB plays such an essential role in our global capital markets,” she said in a statement. “It is an honor and privilege for me to serve on the board of this very important organization. I am excited to help the PCAOB continue to advance its strategic plan and continue its active engagement with stakeholders. I look forward to working with my fellow board members to continue the PCAOB's goals of protecting the interest of investors and enhancing audit quality."
Duhnke praised both Kaiser and Zietsman. “The PCAOB has greatly benefited from Jim’s energy and dedication to our mission and strategic plan," he said in a statement. "His incredible breadth of experience and depth of knowledge have been instrumental in advancing several key initiatives such as improving our stakeholder engagement, enhancing our inspections’ process and reporting, and developing a plan to technology-enable our organization.”
“As our Chief Auditor, Ms. Zietsman has been an instrumental part of the Board’s efforts to improve audit quality," Duhnke added. "We look forward to working with Megan in her new role as we continue to leverage her deep expertise to further advance our strategic plan.”
Clayton and SEC chief accountant Sagar Teotia both thanked Kaiser and Zietsman for their service at the PCAOB.
“I would like to thank Jim Kaiser for his dedicated public service as a member of the PCAOB Board,” Clayton said in a statement. “Jim brought a very deep and invaluable level of audit expertise and experience to the board and we were fortunate that he was willing to give so much time to public service after a distinguished professional career. My interactions with Jim were always positive. He moved the PCAOB forward and I will miss his expertise and professionalism.”
“I would also like to thank Jim Kaiser for his dedicated service and his contributions to enhancing audit quality,” Teotia said in a statement. “Jim has worked with many others at the PCAOB to help the organization continue its efforts in advancing its strategic plan. Specifically, his expertise was critical to help improve stakeholder engagement, enhance the PCAOB inspections’ process, and advance the PCAOB from a technological point of view.”
"Megan Zietsman brings significant leadership experience and deep expertise in domestic and international auditing and standard setting," Clayton added. "Megan's expertise in combination with the other members will yield significant benefits to the Board in its efforts to promote audit quality and advance its strategic agenda."
"We look forward to working with Megan Zietsman to further the critical work of the PCAOB,” said Teotia in a statement. “In her role as the chief auditor and director of professional standards of the PCAOB, she made significant contributions to audit quality. Her deep knowledge of auditing and standard setting, as well as her broad experience in communicating with investors, auditors, preparers and audit committees will help the PCAOB in improving audit quality."