SEC Chairman Jay Clayton announced that the Commission has appointed William Duhnke to succeed James Doty as chairman of the Public Company Accounting Oversight Board. The Commission also appointed the remainder of the five-member PCAOB board: J. Robert Brown, Kathleen Hamm, James Kaiser, and Duane DesParte. Earlier this year, Clayton announced that Doty would remain PCAOB chairman while Clayton conducted a search for his replacement and for other new board members. By September, that process had shifted to seeking commissioners’ input and to consultations between Clayton and the Treasury secretary and Fed chairman. Clayton said in a separate statement that the transition to the new board would begin in January 2018.
The new board. Sarbanes-Oxley Act Section 101 provides for a board composed of five members to be drawn from a pool of "prominent individuals" possessing a wide array of qualities, including integrity and reputation, an understanding of investor and public interests, and an understanding of the disclosure obligations of securities markets participants and of accountants in preparing audit reports about those disclosures. Two members must be certified public accountants.
Duhnke comes to the PCAOB from Congress. He is currently Staff Director and General Counsel to the Senate Committee on Rules and Administration, which is currently chaired by former Senate Banking Committee Chairman Sen. Richard Shelby (R-Ala). Duhnke had previously served in a similar role with the Senate Banking Committee. Duhnke’s career before working for Congress included service in the U.S. Navy and on the Commission on the Assignment of Women in the Armed Forces.
The four new board members have backgrounds in academia, business, and accounting. Brown is the Lawrence W. Treece Professor of Corporate Governance at the University of Denver where he also is director of the Corporate and Commercial Law Program. Brown has written extensively on a variety of securities and corporate governance topics. In July, he testified before a House Financial Services Committee subcommittee that "[d]espite the label of 'quack' corporate governance, SOX succeeded in putting in place mechanisms that promoted investor confidence by raising the quality of financial disclosure" (footnote omitted). Brown also is a former SEC staffer.
Hamm is Global Leader of Securities and Fintech Services and Senior Strategic Advisor on Cyber Solutions at Promontory Financial Group, which in 2016 became a wholly owned subsidiary of IBM. The company emphasizes risk management aspects of its clients’ regulatory issues. Hamm previously worked at the Treasury Department and as assistant director in the SEC’s Division of Enforcement. Hamm also is a frequent speaker on cybersecurity issues.
DesParte is Senior Vice President and Corporate Controller of Exelon Corporation, roles from which he is expected to retire in the near future; he previously handled audits at Deloitte & Touche and Arthur Andersen. Kaiser is Global Assurance Methodology & Transformation Leader at PricewaterhouseCoopers.
Investor representative. The PCAOB currently has two advisory groups: the Standing Advisory Group that advises the board on audit practice matters, and the Investor Advisory Group, which makes recommendations to the board on investor protection issues. Clayton’s statement on the appointment of a new PCAOB board mentioned that the PCAOB has several advisory groups and committees. But Clayton suggested that the PCAOB also mull establishing a "dedicated investor representative." By contrast, the SEC has multiple committees that focus on investor interests plus a Dodd-Frank Act-mandated Office of the Investor Advocate with an ombudsman whose task is to coordinate between the Commission and retail investors.
Companies: Promontory Financial Group; Exelon Corporation; Promontory Financial Group; PricewaterhouseCoopers
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