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June 12, 2009

Comments

Edith Orenstein

Tom,

Speaking personally, and without taking a position on whether I agree or disagree with your personal views on any of the rumored candidates, I think you have a very thought provoking post on conceptual grounds.

However, I believe you are being a little unfair in referring to SEC Chairman Mary L. Schapiro's process of selecting a new Chief Accountant as an 'overly protracted process' (in your June 3 post), and your reference to "the chief accountant selection SEC Chair Mary Schapiro has been putting off, but eventually must confront" (in your post today).

In this regard, I thought it may be worthwhile to provide some context as to the length of time of the appointment process for recent Chief Accountants (CA's). Based on data from SEC press releases showing dates CA's were appointed and resigned, (and dates new Chairmen began their terms from historical list of commissioners on SEC website), here is what I found:

- Seven months (approximate, as of today, 6.12.09) since Conrad Hewitt resigned 11.25.08
- Ten months between Hewitt appointment (7.24.06) and Don Nicolaisen resignation (9.7.05)
- Nine months between Nicolaisen appointment (8.14.03) and Bob Herdman resignation (11.12.02 Jackson Day was named Acting Chief Accountant following Herdman's resignation; Day resigned 3.27.03; Wm. Donaldson became Chairman of SEC 2.18.03; thus the total 9 month period between Herdman and Nicolaisen consisted of 3 mo's under outgoing Chairman Pitt, and 6 mo's under incoming Chairman Donaldson)
- Two months between Lynn Turner resignation (7.26.01) and Bob Herdman appointment (9.19.01). However, the two month period may be viewed as understating the amount of time the new administration under Pres. Bush (as of 1.20.01) had to consider potential new appointments if the need were to arise under SEC Acting Chair Laura Unger and new Chairman Harvey Pitt; Pitt became Chair on 8.3.01.)
- Five months between Michael Sutton's resignation (12.9.97) and appointment of Lynn Turner (5.7.08) under Chairman Arthur Levitt)

I believe the above data indicates that the current period of time it has taken so far in considering a potential new CA (approx. 7 months) is about in the middle of the pack for appointments of CA's over the past dozen years or so.

The SEC staff is generally viewed as keeping the ship sailing pretty well during the ebb and flow of new appointments (full disclosure: I used to work at the SEC), and while the length of time for appointments to take place can be a concern, I believe the quality of the appointment process and the quality of the appointment is as important as the quantity of time it takes to make the selection. From reading your blog, I believe you would take that position as well.

Independent Accountant

I oppose 'em all for chief accountant. They are all hopelessly compromised. Or worse. I oppose IFRS as giving the SEC, yes the SEC, too much ability to creatively ignore economic substance. I agree with Revsine. We learned nothing from the S&L debacle.

Raza

Hi Tom, you left out the reverse mortgage industry from your list :) Just joking. An EXCELLENT post, as usual. Loved it.

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