Accounting-oversight board holds its first formal meeting

Members vote to pay themselves salaries of $452,000 a year


WASHINGTON - Six months after it was created by Congress, the new board overseeing the accounting profession - the centerpiece of reform legislation after a year of corporate scandal - held its first formal meeting this week without a permanent chairman, a senior staff or a final budget.

During the meeting, the new board members voted themselves annual salaries of $452,000, or $52,000 more than the pay of the president. (Once it has a chairman, the board announced, its intention is to pay that official $560,000.) They also ratified a lease to locate their Washington headquarters in the K Street space vacated by the Arthur Andersen accounting firm after it collapsed last year.

Their first decision was to reject a symbolic proposal by board member Kayla J. Gillan to rotate the organization's auditors every five years to assure their independence.

Gillan, a former general counsel of a large California pension program, said she had raised the issue to make the new organization a model for public companies. But two other board members - acting chairman Charles D. Niemeier, the former chief accountant for the Securities and Exchange Commission's enforcement division, and Daniel L. Goelzer, a former general counsel of the SEC - strongly objected and said the issue required further study.

The board was formally introduced Thursday by Harvey L. Pitt, who remains the chairman of the SEC despite having resigned two months ago because of criticism over the selection of the new oversight agency. He continues to serve during one of the agency's busiest rule-making periods in history and plans to stay at the commission until the confirmation of William H. Donaldson, who has been selected to succeed him. That process could take months.

Pitt had chosen William H. Webster, the former director of the FBI and central intelligence, to head the oversight board over the objections of the two Democrats on the commission, who questioned his qualifications.

Two resignations

Pitt resigned after failing to tell the other commissioners that Webster had headed the audit committee of a troubled company. Webster also resigned after the disclosure. Without a new leader, the board has had difficulty recruiting senior staff members, though it is offering some of the best salaries for public service jobs, including $425,000 to be the general counsel, $250,000 to be the director of external communications, and $300,000 to be deputy director in charge of registration.

The board has been assigned the job of inspecting the auditors of the nation's publicly traded companies, in effect serving as the auditors of the auditors, as one member put it. It is supposed to write and enforce ethics rules and set standards for the profession.

The bumpy opening of the Public Company Accounting Oversight Board, as it is formally known, was largely unaddressed Thursday, except for a comment by member Willis D. Gradison Jr., a retired member of Congress and former lobbyist for the health care industry, who tried to put the difficulties in a positive light.

"While some pundits have described us as a star-crossed agency, I don't see it that way," Gradison said. "If anything, our rocky beginning has brought us closer together."

The founding of the board came as some Republicans vowed to provide the SEC with a substantially greater budget for the rest of this fiscal year than the White House had sought.

Bill on financing

Rep. Frank R. Wolf, a Virginia Republican who heads the subcommittee that oversees the agency's finances, said late Wednesday that he had introduced legislation this week to provide $776 million for the commission, $208 million more than the White House had sought and the same amount that Congress promised the agency last year in the legislation that created the new accounting board.

"There is strong bipartisan support to give the SEC everything it needs to fight corporate corruption," said John D. Scofield, communications director of the House Appropriations Committee.

Last year, a Senate committee approved an appropriation for the agency of $755 million, although it is unclear whether the Senate would now approve that figure. Republicans in the Senate facing competing budget priorities have been discussing a budget figure for the agency of about $650 million.

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.