Thoughts About Candidates For Chief Accountant

I’ve done a little research on the final candidates for Chief Accountant at the SEC.  Tom Selling of the Accounting Onion has handicapped the candidates in yesterday’s post, Handicapping the Chief Accountant Contest.  It is worth a look.  I lack enough inside contacts to be able to offer an opinion as to each candidate’s chances. However, I can rate each candidate on the major issue confronting U.S. accounting–whether or not to switch to IFRS.

Jane B. Adams, labeled the front runner by accounting pundant Tom Selling she is rated as having a 50% probability of being chosen), has some, but not a lot of, prior SEC experience.  She served as Deputy Chief Accountant in the U.S. Securities and Exchange Commission’s Office of the C hief Accountant from 1997 to 2000.  She was also Director of Accounting Standards at the AICPA from 1996 to 1997 and a Project Manager at the Financial Accounting Standards Board from 1987 to 1996. Recently, she has been a member of the user community as an analyst in equity research: 2 years in sell-side equity research at CSFB as Director of Accounting and Tax Policy and the last 6 years on the buy-side at Maverick Capital.  Maverick invests globally in liquid, primarily larger cap, equity securities based on in-depth fundamental research.  She was contributed less than $2,000 to President Obama’s campaign.

In a brief 2001 paper, Identical Companies, Different Financial Statements, she comments about a proposed accounting standard on derivitives, “Such changes do not improve the quality of earnings if they provide substantively different accounting results for the same instrument and exposure.”  From this statement, it is possible to project that because of IFRS flexibility in accounting standards she might oppose their adoption in the U.S.  However, she has made no public comments in the past eight years, so far as I can see.  Although I have no proof, my inclination is to rate her as IFRS friendly, given she has worked on analyzing global companies trading in numerous international markets.

Wayne Carnall, currently chief accountant of the SEC’s Division of Corporation Finance and a former partner at PricewaterhouseCoopers, is touted by Selling as having a 40% chance of being selected.  Carnall, given his lengthy association, is thought to be  big firm candidate.  He has been assigned on numerous occasions to explain the proposed SEC roadmap.   Supporting IFRS and moving toward a single global accounting language seems consistent with his background and public comments.

James Kroeker is acting SEC chief accountant and a former partner at Deloitte & Touche.  After reading numerous comments and reviews of his speeches, it seems clear to me that he is an IFRS advocate.  Although he seems to prefer a complete turnover to IFRS, he has suggested that adopting some, but not all, of IFRS would be a plausible first move.  Selling rates him as having an 8% chance of being named.

Jack Ciesielski and Charley Niemeier are definitely not IFRS proponents.  I cannot find evidence that either will support a single world standard, let alone a move to IFRS.  Both favor strong accounting standards, tight regulation and vigilent enforcement.

SEC Chair Mary Schapiro certainly has choices.  On one end of the continuum would be Ciesielski and Niemeier, who favor tight regulation, U.S. tailored accounting standards and protection of investors.  On the other end are Kroker and Carnall, who have strong ties to the traditional big firm establishment.  They seem willing to promote the big firm party line on IFRS and other issues.  Adams seems to be the compromise candidate but is inexperienced.

Debit and credit – – David Albrecht