BusinessCompany NewsUS Congress calls Pitt’s SEC dysfunctional

US Congress calls Pitt's SEC dysfunctional

A US government report yesterday described the Securities & Exchange Commission under former chairman Harvey Pitt as dysfunctional in its appointments to the new accounting oversight board.

Link: Ex-chief accountant takes rap for SEC scandal

The General Accounting Office, the investigative arm of US Congress, studied the process that led to the controversial appointments of five members to the Public Company Accounting Oversight Board created under the Sarbanes-Oxley Act.

It concluded that while Pitt was in charge, he left the process of selecting and vetting members to the chief accountant Robert Herdman. This approach was neither understood nor endorsed by the other commissioners.

‘The overall process that emerged was neither consistent nor effective and changed and evolved over time. Several factors contributed to the eventual breakdown of SEC’s selection and vetting process,’ the GAO reported.

The GAO found that a breakdown in communication, failure to define selection criteria and inability to produce a final slate of candidates until the eve of election, resulted in the appointment of members who had not been fully vetted.

On the day of election, 25 October, Herdman became aware of potentially controversial information about nominated PCAOB chairman William Webster, but decided not to share this information with Pitt or other commissioners.

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