SEC selects oversight board: The high price of human error … Canadian governance falls short … a recent dip in nonaudit services … guide to managing stakeholder expectations - Update - Public Company Accounting Oversight Board

Internal Auditor, Dec, 2002 by M. McElveen

IN CONSULTATION WITH the U.S. secretary of the Treasury and chairman of the Federal Reserve Board, the U.S. Securities and Exchange Commission (SEC) recently selected the founding members of its new Public Company Accounting Oversight Board. Mandated by the Sarbanes-Oxley Act of 2002, the board will oversee the audits of public companies' financial statements through rigorous registration, standard setting, inspection, and disciplinary programs.

As it was developing the selection list, the commission received nearly 450 nominations and applications for the five board positions. Following controversy over who would be appointed to lead the panel, the SEC named William H. Webster as chairman--a move that ultimately resulted in the resignation of commission Chairman Harvey L. Pitt, after only 15 months on the job, as well as the subsequent resignation of Webster himself, just three weeks into his tenure.

Webster's appointment sparked an uproar when some commissioners and key Bush administration officials learned that Webster had served on the audit committee of U.T. Technologies Inc., a Washington, D.C., firm that allegedly fired its outside auditor after the auditing firm pointed out accounting problems at the company.

Others named by the SEC to the oversight board on Oct. 25 were:

* Kayla J. Gillan, vice president of Independent Fiduciary Services, who served six years as the chief legal adviser to the California Public Employees' Retirement System and to its 13-member board of trustees.

* Daniel L. Goelzer, who currently practices law with an emphasis on securities law and financial institution regulation. Previously, an SEC general counsel for seven years.

* Willis D. Gradison Jr., the senior public policy counselor at the law firm Patton Boggs. A nineterm congressman from Ohio, Gradison served as the ranking member of the House Budget Committee and ranking member of the Health Subcommittee of the House Ways and Means Committee.

* Charles D. Niemeier, chief accountant in the SEC's division of enforcement and co-chairman of the commission's Financial Fraud Task Force.

For more information on the Public Company Accounting Oversight Board, visit the SEC's Web site at www.sec.gov.