Rejoice, audit and financial reporting professionals! We have a new slate of PCAOB board members, with a decided tilt toward experience in securities regulation — and perhaps even a bit light on representation from the audit industry.
SEC chairman Gary Gensler announced the appointments Monday afternoon. By law, the SEC has authority to appoint board members to the Public Company Accounting Oversight Board without Senate approval; so the new crew will be able to get to work as soon as they’re sworn in.
The new members are…
Erica Williams, who will be chairman. Williams has been a partner at law firm Kirkland & Ellis for the last few years, working in the firm’s government and regulatory investigations practice. Williams also spent more than a decade in various roles at the SEC, including as deputy chief of staff to three former SEC chairs and as assistant chief litigation counsel in the Division of Enforcement. She also did a tour of duty in the Obama Administration, serving as associate general counsel to President Obama with a focus on financial and economic policy issues.
Kara Stein, who served as a Democratic commissioner at the SEC from 2013 to 2019. These days Stein is a fellow at the University of Pennsylvania and director of the AI, Data, and Capital Markets Initiative at University of California law school. She also worked on banking policy matters at the Senate Banking Committee earlier in her career.
Christina Ho, who most recently was vice president of government analytics and innovation at Elder Research. Ho worked during the Obama Administration in the Treasury Department as the deputy assistant secretary for financial transparency and accounting policy, and once upon a time was a senior manager at Deloitte.
Anthony Thompson, currently executive director and chief administrative officer at the Commodity Futures Trading Commission (CFTC), where he oversees the Division of Administration. Before joining the CFTC in 2011, Thompson held senior positions at the U.S. Department of Agriculture in budget and management roles; and he spent 32 years in the U.S. Air Force, where he eventually became a colonel and was chief budget officer.
And remaining on the PCAOB is Duane DesParte, who joined the board in 2018 and has been acting chairman since June. DesParte joined the PCAOB after retiring from Exelon Corp., where he had been chief accounting officer and corporate controller. He started his career in the 1980s and spent 17 years at Arthur Andersen, before joining Exelon in 2003.
What’s striking is that three of the five board members (Williams, Stein, Thompson) have extensive experience at regulatory enforcement agencies, and a fourth (Ho) has experience in regulatory policy development. Only DesParte is a CPA with significant experience in the audit world. (By law only two of the five members can be a CPA, and the chairman cannot be a professional auditor.)
Why Does This Matter?
This matters because the PCAOB had been a train wreck for years. Gensler fired three of four board members in June, after years of in-fighting and mismanagement. (He kept on DesParte as caretaker, and one seat was vacant.) Word soon leaked of some truly bonkers misconduct over the years, including…
- One ex-board member having an affair with a subordinate, who then turned around and tried to blackmail the PCAOB;
- The former chairman, William Duhnke, accused of throwing a soda can at a fellow board member during an argument (Duhnke may have been aiming for a nearby trash can);
- A senior PCAOB staffer filing a wrongful termination suit against Duhnke, claiming he discriminated against her because of her political beliefs and Asian heritage.
Duhnke also presided over turmoil within the PCAOB and various stakeholder groups. The agency disbanded its Investor Advisory Group and Standing Advisory Group, which prompted some members of the Investor Advisory Group to write a letter to Gensler earlier this year calling for reform, including Duhnke’s removal. He also led an overhaul of the PCAOB’s standard-setting agenda, strategic plan, and audit firm inspection process, all in step with the deregulatory drift of the Trump Administration.
Meanwhile, the PCAOB did have a day job of, ya know, overseeing the audit industry. The board flat-lined its pace of enforcement, and dragged its feet on new or improved standards for emerging issues such as data analytics in the audit, cybersecurity of ERP systems inspected during an audit, or how audit firms should handle ESG data.
So the new board has its plate full. Let’s hope new chair Williams and the rest of the gang start digging in.