Accounting unit chairman quits

September 24, 2005|By Bloomberg News

NEW YORK // William J. McDonough, chairman of the Public Company Accounting Oversight Board, is resigning after two years leading the agency created to restore investor confidence weakened by the collapse of Enron Corp. and WorldCom Inc.

McDonough, 71, will depart Nov. 30, or earlier if a successor is in place, he said yesterday. He took the job in 2003, after Congress set up the board as part of the Sarbanes-Oxley Act to improve oversight of corporate accounting.

SEC Chairman Christopher Cox said McDonough "provided superb leadership at a critical time to our nation's investors, capital markets and public companies, as well as the accounting firms that audit them."

The board, which announced its first disciplinary action four months ago, is still defining its role in U.S. corporate governance. It clashed with the Securities and Exchange Commission as spending doubled under McDonough, a former president of the Federal Reserve Bank of New York. The board faced complaints from businesses about the cost of new audits.

"He's put in place the foundations of the regulatory system of the accounting profession," said Michael R. Young, a lawyer and accounting specialist at Willkie Farr & Gallagher LLP in New York. "He basically walked into an empty office building, and he leaves not only with furniture there but with a fully functioning staff."

The board had a rocky start in a controversy over the selection of its first chairman, former FBI Director William H. Webster, by then-SEC Chairman Harvey Pitt. Pitt resigned in November 2002, after it came to light that he had not informed the other SEC commissioners that Webster had headed the audit committee of a company that later came under investigation for fraud and that Webster had fired the company's outside auditors. Webster resigned as chairman of the oversight board.

McDonough, who won his job in 2003 by a unanimous vote of the five-member SEC, said the board "is now a vibrant institution," and said he plans to explore his "wide range of interests." He said he isn't retiring.

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