Audit watchdog chairman to resign
By Kevin Drawbaugh
WASHINGTON (Reuters) – William McDonough will step down as
chairman of the Public Company Accounting Oversight Board, the
U.S. panel created to clean up the auditing business after a
run of corporate scandals said on Friday.
McDonough, 71, will resign on November 30, or when his
successor is in place, whichever is sooner, it said.
Having built the board, known as the PCAOB, from scratch
into a working regulator over the past two years, the outspoken
and often irreverent McDonough said he has no plans to retire.
“I have a wide range of interests in corporate governance,
finance and international affairs and will explore one or a
variety of activities in those fields; I enjoy perfect health
and have not the slightest interest in retiring, now or ever,”
said the former New York Federal Reserve president.
McDonough arrived at the PCAOB amid turmoil in June 2003,
shortly after it was set up under the Sarbanes-Oxley accounting
reform law. The PCAOB was created to crack down on an audit
industry disgraced by scandals beginning with Enron’s collapse.
McDonough “took the mandate in Sarbanes-Oxley and shaped an
effective organization … He was the perfect man for the job,”
said Ohio Republican Rep. Michael Oxley, co-author with
Maryland Democratic Sen. Paul Sarbanes of the reform laws.
Treasury Secretary John Snow wished McDonough well in a
statement, calling him “a champion of making sure corporations
live up to their responsibilities.”
McDonough was not the first PCAOB chairman. He stepped into
the role amid a furor over ex-SEC Chairman Harvey Pitt’s
selection in 2002 of former FBI chief William Webster for the
Webster, Pitt and SEC Chief Accountant Robert Herdman all
resigned in November 2002 in a controversy over the handling of
revelations that Webster had been on the board of U.S.
Technologies Inc., a small company accused of fraud.
Gregory Earls, former chief executive of the company, was
sentenced last February to more than 10 years in prison for
When Pitt stepped down under heavy fire from Congress, the
White House replaced him with former New York Stock Exchange
head William Donaldson, a friend and neighbor of McDonough.
Donaldson persuaded McDonough to take over at the PCAOB, a
non-profit, private-sector body that is supervised by the SEC.
The board has been inspecting and examining the books at
hundreds of audit firms, including the Big Four of Ernst &
Young, PricewaterhouseCoopers, Deloitte & Touche and KPMG.
McDonough said in a statement: “The PCAOB is now a vibrant
institution with an outstanding board and a superb, highly
dedicated staff of almost 400 people … The supervisory
process that we have adopted is working well.”
Preceding McDonough by a few weeks, Donaldson stepped down
from the SEC this summer after just over two years on the job.
The SEC, now headed by former California congressman
Christopher Cox, will play a key role, along with other federal
agencies, in choosing McDonough’s replacement.
Cox praised McDonough, saying, “I am especially grateful
that he has agreed to remain at the PCAOB long enough to permit
a thorough search for a worthy successor.”