A little-known Republican Senate aide is in line to lead the accounting industry’s watchdog, setting up an official who lacks experience in the auditing profession for one of the highest-paying jobs in financial regulation.
William Duhnke, a veteran staff member for former Senate Banking Committee Chairman Richard Shelby, is on track to be selected to become chairman of the Public Company Accounting Oversight Board, according to four people familiar with the matter. An announcement by Securities and Exchange Commission Chairman Jay Clayton could be made in the coming weeks, said one of the people, who like the others asked that they not be named discussing the plan.
The job is seen as one of the most attractive regulatory roles in Washington because it pays more than $670,000 per year — well above the president’s $400,000 salary. The selection of Duhnke, whose name has been circulating as a possible pick for more than a year, would likely be controversial among investor advocates concerned that he would promote a pro-business agenda.
The new PCAOB chairman would replace James Doty, who had quietly campaigned to be re-appointed. Duhnke would be positioned to shift the agenda at the audit board, which was created 15 years ago in the wake of major accounting scandals at Enron Corp. and WorldCom Inc., to be more in line with the anti-regulation views of the Trump administration. Clayton and the SEC’s commissioners would need to approve Duhnke for the position, which doesn’t require Senate confirmation.
In addition to the chairman’s job, the SEC needs to fill at least two other openings on the five-member PCAOB, a nonprofit corporation set up by Congress to police auditors. The board seats come with annual salaries of $547,000.
Chris Carofine, a spokesman for Clayton, declined to comment on the decision. Duhnke didn’t respond to requests for comment. The PCAOB declined to comment.
Major Issues
If he becomes the PCAOB’s new chairman, Duhnke would face major issues roiling the industry, including the long-running dispute over whether the regulator’s inspectors can examine audits of Chinese companies listed on U.S. stock exchanges. Another concern is the push by Big Four accounting firms into consulting, which has raised questions about the potential for conflicts of interest that could lead them to go easy on audits.
More generally, firms have been pressing the regulator to take a less confrontational stance when it reviews their operations and audits. They also would like to see adjustments to some contentious rules that were approved under Doty, who became PCAOB chairman in 2011 during the Obama administration.
For example, in June, the PCAOB adopted, over corporate objections, a new set of standards for what auditors need to disclose about their reviews of companies’ books. The SEC, which has final sign-off on the board’s rules, is still considering whether to approve the requirements.
Decision Punted
When Duhnke first was discussed as a candidate to lead the audit board in late 2015, he drew criticism from Democrats and former SEC officials over his lack of regulatory experience and his ties to Shelby. After the backlash, then-SEC Chair Mary Jo White decided to punt the decision to her successor. White was an appointee of President Barack Obama.
Still, the 2002 law that set up the PCAOB envisions the top job having some separation from the auditing industry, requiring that the chairman not have been working as a certified public accountant for the preceding five years. Previous heads of the board included two former Federal Reserve officials and Doty, who was a longtime securities lawyer and SEC general counsel.
Duhnke, who is staff director of the Shelby-led Senate Rules and Administration Committee, would join other aides tapped by the senator for prominent regulatory roles.
Republican Commissioner Michael Piwowar, who people said has led the push for Duhnke’s appointment, formerly worked under Shelby as the Banking Committee’s chief economist. And Hester Peirce, a Republican who has been nominated by President Donald Trump to become a commissioner, also served on the committee staff. Piwowar declined to comment.
Clayton hasn’t decided whether to advance Duhnke’s appointment before or after Peirce and Democratic nominee Robert Jackson are confirmed as commissioners, according to one of the people familiar with the decision.
This article was provided by Bloomberg News.
