Several issues ago, I wrote of how the Enron and WorldCom debacles more or less defined my tenure as editor-in-chief at Accounting Today.Much like a stubborn barnacle appended to the bottom of a garbage scow, the serial dramas continued for nearly five years, influencing much of the content within these pages, and no doubt future editorial as well. With the recent appointment of a new chair in Mark Olson at the Public Company Accounting Oversight Board, I realized that my contact with the PCAOB has lasted nearly as long.
A congressional by-product of the Sarbanes-Oxley Act, the oversight body emerged from very shaky - some might even say embarrassing - beginnings to become a concern with roughly 500 staff members and nine offices.
Last year, William McDonough - a banking veteran who once headed the New York Federal Reserve and was the PCAOB's first chairman of any tenure - announced that he was stepping down. A nine-month search ensued to find a successor in Olson, who, like McDonough, is a banker by trade - not an accountant - and also emerged from the Federal Reserve system, most recently serving as governor.
McDonough faced the challenge of getting a fledgling organization off the ground that few really had a clear idea of what its final incarnation was supposed to look like. Like the catch phrase of blue-collar comedian Larry the Cable Guy, he had little choice but to "git r done."
McDonough quickly make it clear in no uncertain terms that the folly of self-regulation in the profession was officially over, exerting the board's authority over auditing standards and informing accounting firms that if they had any desire to perform SEC work, they had to line up, register, and await their turn to be inspected. Currently, nearly 1,700 audit firms are registered with the board, including many that don't perform SEC work.
McDonough didn't get much of a honeymoon period at the accounting regulator, and it appears his successor's first days won't be consumed with photo opportunities and those new-kid-on-the-block "thank you for having me" speeches in and around the Beltway.
While at the Fed, one of Olson's marquee duties was voting on interest rates, so whatever political and regulatory skills he acquired during his tenure there will, for sure, be quickly deployed in his new post.
By all accounts, he's probably going to need them.
Olson, who rose through the ranks of his family banking business in his native Fergus Falls, Minn., takes the reins at a time when there is considerable lobbying to repeal the 404 internal controls portion of the SOX - especially for smaller filers. If that's not enough to qualify as an Excedrin headache, the board also faces a lawsuit that questions its constitutionality. And the issue of backdating stock options is bound to surface before too long.
Olson said he would spend the first month or so in his post in a "listening mode." He will also have to ensure his credibility by walking a balance beam between the audit firms under his agency's purview, investors, and the rapidly growing legions determined to peel away layers of SOX.
On paper at least, Olson seems to possess the credentials to lead the board into its next phase of growth and deal with the ancillary issues surrounding the regulator - even if they don't always focus strictly on accounting and auditing.
It comes with the territory.
