Auditing

Daniel Goelzer Reappointed to PCAOB

One of the first members named to the audit oversight board, Goelzer has weathered its rocky start under William H. Webster, a lawsuit that questio...
Sarah JohnsonJuly 2, 2007

The Public Company Accounting Oversight Board has re-appointed Daniel Goelzer for a second, five-year term as a board member of the audit firm overseer.

Soon after learning his re-appointment was official, Goelzer told the PCAOB’s advisory group that he considered working with the board to be a “privilege and a professional pleasure.” The Securities and Exchange Commission, which as the PCAOB’s oversight body approves all of the board’s appointments, publicly announced its approval of the move on Monday.

No stranger to the securities-regulation arena–he had 16 years of working at the SEC under his belt–Goelzer was among the first PCAOB members to be named when the board was established by the Sarbanes-Oxley Act in 2002. While at the SEC, he made his mark by seving seven years as its general counsel–the longest tenure of anyone to serve at that post. He has also served as a partner to law firm Baker & McKenzie, a law clerk at the U.S. Court of Appeals for the Seventh Circuit, and an auditor at Touche Ross & Co., a predecessor company of Deloitte & Touche.

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As a CPA, Goelzer fulfills the PCAOB’s Sarbox requirement that at least one of the board members be a certified accountant. Sarbox also mandates that Goelzer’s next term will be his last, since board members are limited to two terms. The founding members’ first terms expire at different dates so that the board will stay fully staffed.

PCAOB chairman Mark Olson said Goelzer has brought “extraordinary value” to the board during his first term. Along with helping to set up the non-governmental, nonprofit organization, Goelzer has weathered the more challenging times the board has endured. Those include its rocky start under its first chairman, William H. Webster, who quickly resigned following a corporate scandal and the SEC’s divided vote for his appointment. A lawsuit that was recently thrown out questioned the PCAOB’s constitutionality. The suit, Goelzer has said, could have led to questions about the constitutionality of other regulatory bodies, including the SEC.

But perhaps the most trying issue before the board in recent months has been the pressure to revise its controversial internal-control auditing standard. In fact, Goelzer noted that the standard has “overshadowed” much of the PCAOB’s work. “Often, if non-accountant audiences are familiar with the PCAOB at all, it is because they know we have something to do with auditing of internal control over financial reporting and it is costing them money,” he noted at the Midwest Securities Law Institute Symposium last fall. “It’s certainly the most controversial public policy issue currently facing the PCAOB.”

Indeed, not long after companies began complying with Sarbox and saw their audit fees skyrocket, they largely blamed the PCAOB’s Auditing Standard No. 2 for their troubles. The standard, which management used as a de facto guidance for their requirements under Sarbox, seemed to encourage auditors to bundle minutiae with more relevant, high-risk areas of internal controls over financial reporting. With the new standard — which needs the SEC’s approval, which is expected to come later this summer — the PCAOB is hoping to change that and get auditors to focus on only the areas that could potentially lead to a material misstatement.

Presumably — as Goelzer was hoping when the staff was rewriting AS2 — he and the board can move on to other priorities.

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