Pricewaterhouse Partner Named to Key S.E.C. Post
Published: August 15, 2003
Donald Nicolaisen, a senior partner at PricewaterhouseCoopers, was named chief accountant at the Securities and Exchange Commission yesterday. The S.E.C. chairman, William H. Donaldson, turned to Mr. Nicolaisen, a 36-year industry insider, to fill a post that had been vacant since November.
Mr. Nicolaisen, 59, will lead the office that sets rules for accountants at a time when the commission has increased regulation of the industry in the wake of auditing failures that helped drive Enron and WorldCom into bankruptcy protection. Mr. Nicolaisen said his experience with the world's biggest accounting firm would not keep him from being tough and vigilant.
''I will enforce the law and demand that people act with integrity and ethics,'' he said at a news conference. ''As a regulator, I will ensure that investor interests are put above the interests of all others.''
The appointment of a Pricewaterhouse partner comes in the same week that the S.E.C. barred two of the firm's accountants from auditing public companies because of their roles in the audits of Tyco International and MicroStrategy. Mr. Nicolaisen will have to overcome the taint that the four biggest auditing firms have suffered from their involvement in recent accounting scandals, some accountants said.
Mr. Nicolaisen's ''first order of business will be to demonstrate that he represents investors and not PricewaterhouseCoopers or the accounting profession,'' said J. Edward Ketz, professor of accounting at Pennsylvania State University's Smeal College of Business.
The appointment is the first top staff position that Mr. Donaldson, who was appointed S.E.C. chairman in February, has filled. Mr. Nicolaisen will work closely with the Public Company Accounting Oversight Board chairman, William J. McDonough, whom Mr. Donaldson appointed in April to lead the regulatory group, created last year by Congress to police the accounting industry. The S.E.C. oversees the accounting board.
Mr. Nicolaisen, who will join the S.E.C. in September, already has ''several key objectives on his plate,'' Mr. Donaldson said. The new chief accountant must restore investors' faith in corporate bookkeeping and help carry out the S.E.C.'s recent accounting rule changes that were set forth in last year's Sarbanes-Oxley corporate governance law.
Along with the accounting oversight board's inspection and discipline programs, auditors must now follow conflict-of-interest rules that bar accounting firms from selling some consulting services to audit clients and prohibit top partners from providing audit services to a client for more than five years. The oversight board is also writing new standards for audits.
Mr. Donaldson and other commissioners said Mr. Nicolaisen's experience at a major accounting firm gave him an inside understanding of the changes needed to clean up the profession.
''Throughout his distinguished career, Don has been a powerful agent of change whose leadership has helped identify, build consensus around and accomplish strategic objectives toward high-quality corporate financial reporting and disclosure,'' Mr. Donaldson said. ''His experience, expertise and enthusiasm will greatly benefit the commission and the investing public.''
Mr. Nicolaisen succeeds Robert Herdman, who quit in November after the botched appointment of the former FBI director William H. Webster to lead the accounting oversight board. A government review of the appointment faulted Mr. Herdman for failing to warn the S.E.C. commissioners that Mr. Webster had served on the audit committee of an Internet company that fired its auditors after they raised questions about the company's accounting controls.The controversy also led to the resignation of Harvey Pitt, the previous S.E.C. chairman.
About half of the S.E.C.'s 16 chief accountants have come from big accounting firms, officials said. Mr. Nicolaisen will be the 17th chief accountant at the agency.
Mr. Nicolaisen said that this week's enforcement actions at PricewaterhouseCoopers were not indicative of the firm's culture. He said he would follow the rules and recuse himself for a year from any matters involving the firm or his clients.
Mr. Nicolaisen joined the firm, then known as Price Waterhouse, in 1967 and headed its national office for accounting and S.E.C. services from 1988 to 1994. He helped engineer the firm's merger with Coopers & Lybrand, the S.E.C. said.
Currently, Mr. Nicolaisen is the firm's engagement partner for Prudential Financial Inc, the S.E.C. said.
''I think very highly of him,'' said Dennis Beresford, a former chairman with the Financial Accounting Standards Board who worked with Mr. Nicolaisen when he was a member of FASB's Emerging Issues Task Force in the 1990's. ''He comes in as a very senior, seasoned person at a critical time for the S.E.C.''