New Leader Named in Complete SEC Overhaul of Audit Board

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By Steve Burkholder

The Securities and Exchange Commission named a Republican Senate aide William Duhnke III to chair the five-member Public Company Accounting Oversight Board in a complete overhaul of its membership.

Duhnke, who replaces James Doty as PCAOB chairman, is an assistant to former Senate Banking Committee Chairman Richard Shelby (R-Ala.). Duhnke is staff director and general counsel of the Senate Committee on Rules and Administration, where Shelby presides.

Also Named: Brown, DesParte, Hamm, Kaiser

The other four members the SEC also appointed Dec. 12 are:

  •   J. Robert Brown Jr., a professor of corporate and securities law at the University of Denver with a specialty in corporate governance;
  •   Duane DesParte, who will be leaving his job as senior vice president and corporate controller at Exelon Corp., Chicago;
  •   Kathleen Hamm, a former Treasury Department and SEC official who works at consulting firm Promontory Financial Group, in Washington, as global leader of securities and financial technology services and as senior adviser on cybersecurity; and
  •   James Kaiser, a partner at PricewaterhouseCoopers LLP who heads up the global firm’s work in transforming its audit technology.
The five will takes seats on a board that pays some of the highest salaries in financial regulation. PCAOB’s full-time chairman is paid $672,676 a year, according to the board. The other panel members—also full-time officials—are paid $546,891.

Expired Terms; Reappointment Not Made

The term of Doty, a Republican former SEC general counsel, ended two years ago. He has served past the expiration on the board that was formed under the 2002 Sarbanes-Oxley corporate and accounting reform law, passed after the Enron Corp. and WorldCom scandals. The SEC chose to not reappoint him.

The terms of two others on the board—Steven Harris and Jeanette Franzel—have expired.

The SEC could have reappointed Franzel to a second term, but Harris reached his two-term limit in October.

Lewis Ferguson, who has two more years on his PCAOB term, will be leaving the board, as he and other members serve at the SEC’s pleasure. The commission directly oversees the audit board.

Duhnke’s Name Surfaced in 2015

Duhnke’s name first surfaced in late 2015 as a potential PCAOB chairman. At that time, Democrats and former SEC officials faulted the possible nomination because of Duhnke’s lack of regulatory experience and links to Shelby, under whom SEC member Michael Piwowar also worked.

On Dec. 4, when SEC Chairman Jay Clayton said that the commission was nearing the end of its PCAOB selection process, he also praised the audit board for doing “a nice job.” He wants to “see them doing a good job on standards going forward,” he said.

“I’m not looking for any radical change in the way we approach this,” the SEC chief said of the PCAOB’s work.

The SEC was assembling “a really high-quality, diverse group” with “diverse perspectives” on the PCAOB, Clayton told reporters at a Washington conference.

To contact the reporter on this story: Steve Burkholder in Norwalk, Conn. at sburkholder@bloombergtax.com

To contact the editor responsible for this story: S. Ali Sartipzadeh at asartipzadeh@bloombergtax.com

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