Audit Board Gets Ready for Business

The new Public Company Accounting Oversight Board, still without a permanent chairman, a headquarters, a budget or a Web site, has nevertheless begun a flurry of activity, hiring a headhunter to scout executives, touring office space and lining up vendors for phones and equipment.

The five-member board, created by Congress in the summer to police the scandal-ridden accounting industry, is waiting for a chairman to replace former FBI Director William H. Webster.

Members said they hoped the process would be sped up by President Bush’s nomination Tuesday of William H. Donaldson as chairman of the Securities and Exchange Commission. The SEC oversees the board and appoints its members.

The board faces an April 25 deadline to begin registering and investigating auditing firms, and a key member of Congress said Thursday that the deadline might be impossible to meet.

Rep. Barney Frank (D-Mass.), ranking Democrat on the House Financial Services Committee, said Congress recessed for the holidays without passing legislation that would enable the Treasury Department to release operating funds for the accounting board.

In the meantime, despite his resignation, Webster hasn’t stopped working for the board. He attended an all-day organizational meeting last week and missed a 90-minute conference call Tuesday only because of an angioplasty procedure, board member Willis D. Gradison Jr., a retired Republican congressman from Ohio, said in an interview this week.

Webster said last month that he would quit the post amid questions about his role as a director of U.S. Technologies Inc., which fired its auditors in 2001 after they criticized the firm’s financial controls.

That controversy in turn sparked the resignations of SEC Chairman Harvey L. Pitt and his top accountant, Robert Herdman.

Gradison said the accounting board hired Los Angeles-based executive search firm Korn/Ferry International to help it select its half-dozen top executives: a general counsel, a chief auditor, a director of inspection and registration, a director of enforcement and investigations, a director of human resources and a director of public affairs.

Another key hire is an interim administrator to run the office for 60 to 90 days while the board organizes its budgeting, hiring and equipment purchasing, Gradison said.

Board member Charles D. Niemeier, who has been chief accountant for the SEC’s enforcement division, said in a speech Wednesday to the American Institute of Certified Public Accountants that he wants the board to have a strong hand in drafting rules for auditors. He said he expected the board to hire as many as 500 people.

Gradison and Niemeier said Donaldson’s appointment should speed the naming of a chairman.