What we also discovered in putting the list together was that in some instances, it became impossible to separate the captain from the team. This year’s D100 is a case in point: Our editors and board of advisors were nearly unanimous in our selection of President Barack Obama as this year’s most powerful corporate governance influence. And yet, to do justice to the seismic shift his policies have brought about in the boardroom, we also had to recognize the many other  “New Voices” in the Administration who are now leading the greatest financial reform of American business since the 1930s.

So, we ask that in the pages ahead you pay more attention to who counts, and less to how we count, in arriving at our final selection of individuals and institutions that have met the requirement to be “most influential.” We think you’ll agree it’s an intricate and impressive mosaic where the whole equals much more than the sum of its parts, which may or may not be greater than 100.

Regulators & Rulemakers

Team Obama
It is often written that reasonable people may disagree, and with Americans and their Presidents, it is practically a way of life. But even an unreasonable person could only conclude that this President and his Administration are having a profound and lasting influence over the boardroom. President Barack Obama has demonstrated an enormous capacity for calm in uncertain times. His relative youth leads to frequent comparisons to John F. Kennedy and his communications skills to those of Ronald Reagan. But it is his aggressive response to the unparalleled economic challenges that greeted him at the dawn of his young presidency that harkens back to an earlier figure of towering influence,  Franklin D. Roosevelt.

FDR’s massive social and financial reform programs—the creation of Social Security as part of the New Deal, the establishment of the Securities and Exchange Commission (SEC) and the Federal Deposit Insurance Company (FDIC)—helped restore confidence in the nation’s banking system coming out of the Great Depression. One could plausibly take major portions of FDR’s New Deal and substitute his name with President Obama’s.  The implementation of the $787-billion American Economic Recovery Act one month after Obama took office, coupled with his handling of the Troubled Asset Relief Program (TARP), which sought to strengthen the financial sector by buying up the assets and equity from troubled banks, has clearly helped the nation avoid further financial disaster and put the economy on the path to recovery.

And finally, turning again to the FDR playbook, Obama assembled a team of wise men and women, formidable economic and business minds, whose decisions are having a lasting effect on the role of the corporate director. Preeminent among them was the choice of Rahm Emanuel as chief of staff. Described as a veritable “influence machine,” within the Administration and Congress, the former Congressman from Obama’s home state of Illinois is known as a hard-charging, brutally candid, sometimes combative, acutely intelligent man who can get things done and knows the ways of the Capitol and the boardroom.

The Enforcers
Perhaps second only to Obama in terms of her influence on boards and corporate governance, career regulator Mary Schapiro heads up the 75-year-old SEC. Before the crisis, the agency’s very existence was in question: “Obsolete,” “out of touch,” and “behind the times” were just some of the many terms uttered by detractors. The Commission, under former chairman Christopher Cox, was pilloried for missing the Madoff scandal.

As former SEC chairman and Directorship 100 Hall of Famer, Arthur Levitt described her: “She has the skills, the intellect, and the character to be a superb SEC chair.” But Schapiro will face a new kind of challenge in the role, not just that of proving her own qualifications, but also instituting a significant remodeling of the SEC itself, as she works to bring it into the new regulatory era.

Moving swiftly to address regulatory concerns in the wake of the financial crisis, the SEC has rolled out a series of proposals that could embody the biggest change to the rules of the game for directors in some time. Schapiro, who is no stranger to the boardroom, having served on the boards of Duke Energy and Kraft Foods, has overseen proposed rule changes on proxy access, broker voting, say on pay, and new requirements for disclosure on executive compensation and director qualifications. It’s now up to her and fellow commissioners Kathleen Casey, Elisse Walter, Luis Aguilar, and Troy Paredes to determine the final regulations that emerge from the proposals.

Other key players Schapiro has brought into the SEC include Senior Advisor Kayla Gillan, Chief Accountant James Kroeker, and Director of Enforcement Robert Khuzami. Gillan was a founding board member of the Public Company Accounting Oversight Board (PCAOB) and former general counsel to CalPERS. Kroeker joined the SEC as deputy chief accountant in 2007 from Deloitte and Touche where he had been a partner in the firm’s national accounting services group. Kroeker recently said that the proposed road map for the convergence of International Financial Reporting Standards,pushed to the back burner amid the larger issues of market reform, would be restored as another top priority. Khuzami is a former federal prosecutor, has pledged to improve the SEC’s enforcement performance by creating specialized units to provide “structure and resources for staff to ‘get smart’ about certain products, markets, regulatory regimes, practices and transactions.”

TARP Overseers
Another example of Obama’s preference for brains over politics was his reappointment of Sheila Bair to chair the FDIC. Another fiscally conservative Republican, on Bair’s watch alone this year, 94 banks have failed, creating a new challenge:  how to replenish the fund. Bair has also been an integral part of the team overseeing TARP. Neil Barofsky is a former New York assistant attorney general confirmed by the Senate in December as special inspector general. Dubbed the “TARP Cop,” his job is to figure out how and where the $700-billion TARP funds are spent, reporting directly to the President and providing updates to the Congressional Oversight Panel chaired by bankruptcy expert and Harvard Law School professor, Elizabeth Warren. COP’s first report, released in February, casti-  gated then-Treasury Secretary Henry Paulson for his performance and lack of transparency, reporting that the Treasury Department  had overpaid by $78 billion for the assets it bought from banks.

Interestingly, while Obama sponsored and was a strong proponent of  “say on pay” legislation while a senator, since appointing Kenneth Feinberg special master of compensation, he has appeared unwilling to make the issue a top priority. Feinberg, who has immersed himself in some of the country’s most troublesome and high-profile cases, is considered a superb choice, both in terms of skill and temperament, by Capitol Hill insiders. His most noteworthy case was the 33 months of pro-bono work he did following the 2001 terrorist attacks to determine how much each victim would receive from the federal government’s September 11th Victim Compensation Fund.

Feinberg may in fact be perfectly suited for a job that most compensation specialists see as thankless, and possibly as a “no win” situation. As the Obama Administration’s comp expert, Feinberg was called on to monitor the compensation of executives in what were once some of America’s most prestigious corporations, now TARP recipients, including American International Group (AIG), Bank of America, Citibank, Chrysler, GMAC, and General Motors.

Fed to the Rescue
To prevent American capitalism from spiraling deeper into the abyss, nine months after President Obama made his first Cabinet announcement, he re-nominated Ben Bernanke as Federal Reserve chairman. The former Princeton economics professor was selected by Bush in 2005 to succeed Alan Greenspan. In 2008 after the market crashed, Bernanke invoked emergency powers, slashed interest rates, and spent trillions of dollars to right the financial system. Just last month, he declared the recession “likely over.” Though he seldom gives interviews, Bernanke is never far from the public eye and has been a stalwart in the transition between presidential administrations and in the effort to stem the economic slide.

When then President-elect Obama named his economics team, it included players who, like Bernanke, were already steeped in the crisis details, demonstrated a studied understanding of Depression-era economics, or some combination of both. Enter Treasury Secretary Timothy Geithner and Chief White House Economic Advisor Lawrence H. Summers. Geithner, who is currently pushing legislation to provide more systematic regulation of financial institutions, including new limits on executive compensation, recently told one interviewer that he is optimistic major reforms will be passed.

Prior to his appointment replacing Henry Paulson, Geithner was president of the Federal Reserve Bank of New York and part of the team central to the critical negotiations that resulted in Bear Stearns being tucked into JPMorgan Chase, Merrill Lynch going to Bank of America, Lehman Bros. disappearing, and Citigroup and other struggling banks getting a lifeline.

Summers, the former Harvard University economist who became its president following his tenure as Treasury Secretary to President Clinton, is director of the Cabinet’s National Economic Council. The group was established in 1993 to coordinate and ensure that the President’s economic policy agenda is carried out.

Rounding out the team, Paul Volcker, the former Fed chief under Clinton, was selected to chair the president’s economic recovery advisory board. And Christina Romer, a former UC Berkeley economist, who administration sources suggest is well- regarded by both parties, chairs the Council of Economic Advisers. Her appointment was seen as a further triumph of brain over politics in Obama’s approach to talent recruitment.

The free-enterprise groups and a Nevada accounting firm sued to stop the Securities and Exchange Commission from naming members of the accounting board, set up by Congress to oversee public-company accountants.

“In creating the board, Congress deliberately sought to test the outer boundaries of its ability to reduce presidential power,” the groups said in the appeal.

The lawsuit claimed the U.S. Constitution required board members to be appointed by the president or the SEC chairman, rather than the entire commission for the securities agency.The Supreme Court’s decision to hear the appeal breathes new life into the case, which didn’t get much traction in lower courts.

The U.S. Solicitor General’s office, in court briefs, had urged the high court to reject the appeal, calling it a “poor vehicle” to resolve the constitutional issues raised by the challengers. “The president’s control over the SEC is constitutionally sufficient and the act in turn grants the SEC complete and pervasive control over every aspect of the board’s authority,” Solicitor General Elena Kagan wrote.

A U.S. federal judge dismissed the lawsuit in 2007 and the Washington-based U.S. Federal Circuit Court of Appeals also rejected the challenge in a 2-1 decision last year. The case has received support from Kenneth Starr, who in an op-ed piece published earlier this month in The Wall Street Journal, questioned the efficacy and accountability of the regulatory agency,claiming that the organization does not “pass constitutional muster.”

The private, nonprofit board is charged with inspecting and disciplining public company accountants.The case is the Free Enterprise Fund vs. the Public Company Accounting Oversight Board, 08-861. Oral arguments will be held in the fall, and a decision is expected by July 2010.

In a Wall Street Journal editorial column, Starr, along with Georgetown law professor Viet Dinh, questions the efficacy and accountability of the regulatory agency, claiming that the organization does not “pass constitutional muster.”

Starr and Dinh write that the PCAOB is massively inefficient, and largely responsible for the $1 trillion in Sarbanes-Oxley expenses he cites.

“That’s why we are now seeking review from the Supreme Court over acase we first brought during the administration of George W. Bushchallenging the structure of an agency that has great economic impactyet operates almost entirely outside the President’s control. We, alongwith Republican lead counsel Michael Carvin and attorneys with thefree-market Competitive Enterprise Institute, are asking the Court togive President Obama the power he is constitutionally entitled toexercise over this entity that affects so many shareholders andentrepreneurs: the Public Company Accounting Oversight Board,” the duo write in the op-ed piece.

Created by the Sarbanes-Oxley Act of 2002, in the wake of the Enronand WorldCom accounting scandals, the PCAOB has broad powers to setauditing standards for public companies and to investigate anddiscipline accounting firms that audit public companies.

Starr and Dunn serve as counsel to the plaintiffs in Free Enterprise Fund v. Public CompanyAccounting Oversight Board.

FASB, in conjunction with the Public Company Accounting Oversight Board (PCAOB), looks to establish a firm set of guidelines for valuing the lagging assets whose fair value-determined worth many have blamed for the current economic malaise.

Said a PCAOB spokesperson, “[We] will evaluate the FASB’s accounting guidance to determine whether any conforming amendments to the auditing standards will be necessary, or whether other guidance would be helpful.”

FASB is considering a proposal that would determine the time frame by which a company is required to report a writedown on weakened assets. Under the proposal, financial firms could separate credit and non-credit losses, taking a smaller loss on their income statement.

Such a proposal could be difficult, says Jim Pitrat of accounting firm SingerLewak, “due to complexities in the securities, including visibility into underlying assets.”

The Securities and Exchange Commission’s Office of Economic Analysis (OEA) has extended the deadline to January 31 for public companies’ participation in a web-based survey about the costs and benefits of Section 404 of the Sarbanes-Oxley Act of 2002, according to Aim 168 Real Estate.

The survey will help inform the SEC’s ongoing cost-benefit study of Section 404 implementation with a focus on the consequences for smaller companies.

“We encourage all companies with Section 404 experience to participate,” said James Overdahl, chief economist at SEC. “The survey provides companies with an opportunity to share their experiences and provide a comprehensive set of facts on the effectiveness and efficiency of compliance with the rules established pursuant to Section 404.”

There have been responses from approximately 2,000 companies and is seen as an encouraging trend. The survey’s deadline is being extended from January 16.

The SEC’s cost-benefit study will help the Commission assess the effects of measures taken by both the SEC and the Public Company Accounting Oversight Board (PCAOB) in previous years, including whether the measures have helped companies reduce their costs of compliance and whether the Commission should consider additional measures. These measures include new guidance for management’s Section 404 assessment, which was issued last year, and the PCAOB’s effort to make the Section 404(b) auditor attestation process more efficient.

A federal appeals court ruled that the Public Company Accounting Oversight Board is constitutional. The ruling rejects a claim that the creation of the PCAOB, which dispenses rules for auditors including the Big Four, violates the Constitution’s separation-of-powers principle.

PCAOB Board of Directors

Chairman

Mark W. Olson

Members

Daniel L. Goelzer

Bill Gradison

Steven B. Harris

Charles D. Niemeier

Nevada accounting firm Beckstead & Watts and The Free Enterprise Fund, a free market advocacy group, filed the lawsuit, arguing that the PCAOB’s structure and operation, including its freedom from Presidential control and the method by which its members are appointed, are unconstitutional giving it “massive unchecked powers,” according to the complaint.

Judge Judith W. Rogers ruled that the board members in question were not high ranking enough to require a Presidential appointment. The five SEC commissioners, appointed by the President, are sufficiently able to govern the board without the need for the President to appoint every member of the PCAOB, she wrote.

In his dissenting opinion, Judge Brett M. Kavanaugh argued that the structure of the PCAOB is in violation of the Constitution. “Our power system was separated into three branches,” he says, “not concentrated in the legislative branch alone.”

Kenneth Starr, dean of Pepperdine University’s School of Law, who has worked on the case, believes that the decision is wrong. “[PCAOB] was a hasty response. Congress wanted unchecked power, not constant supervision,” he says. Starr says the case could be appealed to the Supreme Court: “This is a case about the Constitution and the law.”

What are the main challenges in running such a large, global firm?

We face many of the same issues as our global clients—navigating the differing laws, rules, and standards in the multiple countries where we operate. Creating a common, global culture committed to seamless, consistent quality worldwide is incredibly important. Having said that, the most important part of my job is to make sure that every person at Ernst & Young wakes up with a personal sense of right and wrong. Nothing is more important than personal integrity and commitment to quality. It is their personal and professional obligation to speak out when something isn’t right, whether at a client or down the hall.

Another challenge is getting great people in the right quantities in the right places, because local supply and demand don’t always match up. In China, for instance, there is just one licensed accountant for every 10,000 people. By comparison, in India, there is a rich source of skilled talent, probably more than the local market can bear. This makes the mobility of our people important. Longer term, we are also working with local universities in certain markets to encourage more accounting programs.

What do board members need to know about IFRS? How will it change the way they view the audit function, if at all?

The movement toward the adoption of a single global accounting standard worldwide is an important development. IFRS [International Financial Reporting Standards] is becoming the dominant norm as more than 100 countries either require or permit IFRS. The United States can’t afford to be an outlier.

I want to be clear: I’m not calling for convergence. When people talk about convergence they usually mean moving different standards closer together. We need a single standard so that companies are transparent and investors can understand and compare one investment against the other, no matter where the company or investor is located. The trend is clearly heading toward adoption of IFRS, and the United States, along with many other jurisdictions, needs to step on board.

When did the importance of accounting in the corporate governance picture take hold, assuming that pre-Enron there were signals that were not yet felt publicly?

Accounting has always been an important part of the corporate-governance picture, but pre-Enron it wasn’t as publicly apparent. Today, the role of our profession is more deeply appreciated. Within companies, the increased focus on internal controls over financial reporting has cascaded and enhanced responsibilities throughout organizations.

On a deeper level, there’s a greater understanding today that the accounting profession matters a great deal to the global capital markets and to practically everyone. We provide assurance that companies are playing by the rules, whether it’s accounting, financial reporting, or tax rules. We help create confidence in financial data, which is critical for the smooth functioning of the global capital markets.

How has the shift in reporting to the audit committee affected your relationship with clients?

There has been a significant change in the roles, responsibilities, and relationships between management, audit committees, and the auditors. It’s a triangle with audit committees on top, management on one side, and auditors on the other. Audit committees hire and fire us, evaluate our performance, and preapprove every service we provide. In many ways, audit committees act as a surrogate for investors, which is extremely important.

Do you find SOX and its implementation through the PCAOB to have been executed wisely?

We moved to being a regulated profession, and we are much stronger as a result. Independent oversight has enhanced audit quality. A recent survey by the Center for Audit Quality found that more than three-quarters of audit committee members rated overall audit quality “very good” or “excellent,” and 82 percent said it has improved in recent years. SOX has had a positive impact, but sometimes it is used as a euphemism for every new development that arose post-Enron. I don’t believe SOX needs to be changed. Rather, we need to focus on developing common standards and practices across the world’s capital markets.

In the argument over the primacy of a rules-based system like we have, and a principles-based system, which do you think works best and why?

It’s not that easy to suggest that one jurisdiction’s system is better or worse. Rules-based standards like U.S. GAAP are rooted in principles, and principles-based standards like IFRS need definition, so there needs to be some balance. We’ll probably end up somewhere in between, but in either case professional judgment is required and needs to be respected.

What impact has activity in private equity had on your business? Are public companies declining in importance?

Private equity funds continue to be active in the current market, but corporates are actually more active now than they have been in the recent past. Corporate balance sheets are flush with cash, and competition from PE funds, especially on larger deals, is less intense, given constraints in the lending market. Corporates are exercising more rigorous and proactive portfolio management by disposing of non-strategic assets.

Are you worried at all about auditor risk when only four firms audit the majority of public companies?

The risk of losing another major firm, whether at the hand of government or civil litigation, is a genuine public concern with global implications for markets, investors, companies, and the economy. If another firm were to fail, my fear is that the best people —who certainly have choices in life—would leave public company auditing. The business model would be proven unsustainable. There is an ongoing debate in the policy community about whether to deal with such issues proactively or wait until disaster strikes. For the sake of everyone, I would advocate the former.

Quarterly earnings reporting is considered a necessary evil. Based on your experience in countries where quarterly earnings reporting is not required, what do you think?

The issue is really about quarterly earnings forecasts, of which I am not a fan. When expectations aren’t met, it leads to volatility, which isn’t good for anyone. The bigger question, though, is how we handle the fact that investors will soon be able to get a wider range of information on a real-time basis, much of which won’t be subject to auditing. Building trust in the reliability of this information will be a challenge, which underscores the need for rigorous internal controls.

What areas of the world are most dynamic in your business now?

The most dynamic opportunities are coming from such areas as China, the Middle East, the former Soviet Union, India, and Brazil, which are experiencing rapid globalization. Having said that, developed markets such as the United States, the United Kingdom, Germany, France, and Australia are important drivers of our business and look set to continue.

Roger Ailes, Fox News

Sharon Allen, Deloitte & Touche

Herbert M. Allison Jr., Director

Gavin Anderson, GMI

Philip A. Armstrong, GCGF

Norman R. Augustine, Director

Stephen Bainbridge, UCLA

Maria Bartiromo, CNBC

David Batchelder, Relational Investors

Lucian A. Bebchuk, Harvard Law

Irv Becker, Hay Group

Beverly Behan, Hay Group

Richard Bennett, The Corporate Library

Robert S. Bennett, Skadden Arps

Dennis R. Beresford, U. of Georgia

Ethan Berman, RiskMetrics Group

Ben Bernanke, The Federal Reserve

John Biggs, Director

Leon Black, Apollo

Lloyd C. Blankfein, Goldman Sachs

Richard Blumenthal, State of Conn.

Magnus Bocker, Nasdaq OMX

John C. Bogle, Hall of Fame

Richard Breeden, Breeden Partners

Catherine L. Bromilow, PwC

Beth A. Brooke, E&Y

Warren Buffett, Berkshire Hathaway

Peter Butler, Governance for Owners

Marshall Carter, NYSE Euronext

Martha Carter, RiskMetrics Group

John J. Castellani, Business Roundtable

William B. Chandler III, Chancery Court

Ram Charan, Charan Associates

Peter Clapman, Governance for Owners

John C. Coffee, Columbia Law School

Frederic W. Cook, Frederic W. Cook & Co.

J. Michael Cook, Director

Christopher Cox, SEC

Jim Cramer, TheStreet.com

Andrew Cuomo, State of New York

Kenneth Daly, NACD

Julie Hembrock Daum, Spencer Stuart

George L. Davis, Egon Zehnder Intl.

Stephen M. Davis, Millstein Center

James L. Dimon, JPMorgan

Samuel A. DiPiazza, Jr., PwC

Christopher Dodd, U.S. Senate

Amy Domini, Domini Social Investments

William H. Donaldson, Hall of Fame

Thomas J. Donohue, Chamber of Commerce

Ed Durkin, United Brotherhood of Carpenters

Theodore L. Dysart, Heidrick & Struggles

Jay Eisenhofer, Grant & Eisenhofer

Charles Elson, U. of Delaware

John Engler, NAM

Richard Ferlauto, AFSCME

Timothy Flynn, KPMG

Margaret “Peggy” Foran, Sara Lee

Cynthia M. Fornelli, CAQ

Barney Frank, U.S. Congress

William F. Galvin, State of Mass.

William W. George, Harvard Business School

Kayla Gillan, RiskMetrics Group

Robert J. Giuffra, Jr., Sullivan & Cromwell

Scott Goebel, Fidelity

Holly Gregory, Weil, Gotshal & Manges

Robert Greifeld, Nasdaq OMX

Joseph Grundfest, Stanford Law School

Steven Hall, Steven Hall & Partners

Robert Hallagan, Korn/Ferry Intl.

Laurence P. Hazell, Standard & Poor’s

Edward Herlihy, Wachtell Lipton

Robert Herz, FASB

John A. Hill, Putnam

Paul Hodgson, The Corporate Library

Christopher Hohn, TCI

Michele J. Hooper, Director

Anthony J. Horan, JP Morgan

Carl Icahn, Icahn Investments

Ray R. Irani, Occidental Petroleum

Edward Kangas, Director

Adam Kanzer, Domini Social Investments

Henry Keizer, KPMG

Donald Keough, Director

Joe Kernen, CNBC

Richard Ketchum, FINRA

Charles King, Korn/Ferry Intl.

Catherine Kinney, NYSE Euronext

Jannice L. Koors, Pearl Meyer & Partners

Richard H. Koppes, Jones Day

Henry Kravis, KKR

Frederick J. Krebs, ACC

John A. Krol, Director

Robert Kueppers, Deloitte & Touche

Arthur Levitt, Hall of Fame

Martin Lipton, Wachtell Lipton

Jay W. Lorsch, Harvard Business School

Joann Lublin, Wall Street Journal

Steve Mader, Korn/Ferry Intl.

Ken Marzion, CalPERS

Mary Pat McCarthy, KPMG

Bill McCollum, State of Florida

Robert McCormick, Glass Lewis

Blythe J. McGarvie, Director

William McGuinness, Fried Frank

Patrick McGurn, RiskMetrics Group

W. James McNerney, Jr. Boeing

James P. Melican, PGI

Pearl Meyer, Steven Hall & Partners

Bill Miller, Legg Mason

Ira Millstein, Hall of Fame

Nell Minow, The Corporate Library

Robert A.G. Monks, author, Corpocracy

Peter Montagnon, ABI

Gretchen Morgenson, New York Times

Anne Mulcahy, Xerox

Anne Mule, Sunoco

Rupert Murdoch, News Corp.

Alan Murray, Wall Street Journal

Jim Naughton, Corporate Governance Blog

Thomas Neff, Spencer Stuart

Duncan Niederauer, NYSE Euronext

Joseph Nocera, New York Times

Floyd Norris, New York Times

Mark Olson, PCAOB

James Owens, Caterpillar

Michael Oxley, Hall of Fame

William Patterson, CtW

Henry M. Paulson, Jr. U.S. Treasury

Harry Pearce, Director

Harvey L. Pitt, Kalorama Partners

Becky Quick, CNBC

Carl Quintanilla, CNBC

David Rubenstein, Carlyle Group

Paul Sarbanes, Hall of Fame

Charles E. Schumer, U.S. Senate

Stephen A. Schwarzman, Blackstone

Mary Shapiro, FINRA

Damon Silvers, AFL-CIO

David W. Smith, SCSGP

Michael Smith, AIG

Jeffrey A. Sonnenfeld, Yale School of Management

Larry W. Sonsini, Wilson Sonsini

Andrew Ross Sorkin, New York Times

Myron T. Steele, Delaware Supreme Court

Leo E. Strine, Chancery Court

David N. Swinford, Pearl Meyer & Partners

John Thain, Merrill Lynch

Andrew Tuch, Corporate Governance Blog

James S. Turley, E&Y

E. Norman Veasey, Weil Gotshal & Manges

Stephen Wagner, Deloitte & Touche

Carol Ward, Kraft Foods

Henry Waxman, U.S. Congress

Ralph Whitworth, Relational Investors

John Wilcox, TIAA-CREF

Note: More than 100 individuals are named because some listings contain more than one person at the same company or in the same industry.

For the complete 2008 Directorship 100 article, click HERE.

A federal appeals court decided on August 22 that the Public Company Accounting Oversight Board, and the Sarbanes-Oxley Act that created it, are constitutional. The ruling rejects the claim that the PCAOB’s existence violates the Constitution’s separation-of-powers principle.

The Securities and Exchange Commission’s Chairman Christopher Cox said in a statement, “The decision today of the Court of Appeals for the District of Columbia Circuit upholding the constitutionality of the Public Company Accounting Oversight Board is welcome news for the Commission, investors and U.S. capital markets.”

The decision by the U.S. Court of Appeals for the District of Columbia Circuit preserves Sabanes-Oxley and the board, which oversees auditors of public companies. The challenge dates back to 2006 when Beckstead and Watts, a Nevada-based accounting firm, complained that the PCAOB was not a legal body after the board criticized the firm for some of its audits in 2004, according to CFO.

The decision on August 22 was two votes to one. A three-judge panel made the decision and it could still be appealed to a circuit appeals court or to the Supreme Court, if either decides to take the case. The decision concludes that while the President may not appoint the PCAOB’s members, the President still maintains significant influence over the board.

At issue is whether the Public Company Accounting Oversight Board (PCAOB), created under SOX to monitor the accounting profession, is constitutional.

The plaintiff is the Nevada-based accounting firm Beckstead & Watts. Lawyers for the firm–which include former U.S. Special Counsel Kenneth Starr and Georgetown Law Professor and former Assistant Attorney General Viet Dinh–argue that the PCAOB’s “structure and operation, including its freedom from Presidential oversight and control and the method by which its members are appointed, contravene” the Constitution’s separation of powers principles and appointments clause.

The initial complaint was dismissed last year, but Beckstead appealed to the D.C. Circuit, where it’s hoping it will be successful in removing the barriers for smaller firms burdened by the costs of complying with SOX, Brad Beckstead, managing partner of the firm, has said.

Washington Post

“Not only will it be put out of business,” she wrote, “but SOX in its entirety will fall.”

The law apparently lacks a severability clause. If PCAOB is shot down, some observers believe, so goes all of SOX. 

]]> http://www.directorship.com/lawsuit-questions-sox-legality/feed/ 0 http://www.directorship.com/pcaob-adopts-new-auditing-standard/ http://www.directorship.com/pcaob-adopts-new-auditing-standard/#comments Thu, 01 Jan 1970 00:00:00 +0000 Joseph McCafferty http://www.directorship.com/?p=2225

The Public Company Accounting Oversight Board this weekvoted to adopt Auditing Standard No. 6 – Evaluating Consistency of FinancialStatements – and an accompanying set of amendments to the board’s interimauditing standards.

The PCAOB’s adoption comes after the Financial AccountingStandard Board’s issuance of Statement of Financial Accounting Standards No.154 – Accounting Changes and Error Corrections – and the impending issuance ofStatement of Financial Accounting Standards, The Hierarchy of GenerallyAccepted Accounting Principals (GAAP).

The board also removed the hierarchy of GAAP from itsinterim auditing standards, as it believes that the hierarchy is moreappropriately located in the accounting standards.

“Auditing Standard No. 6 will improve the quality of theaudtor’s reporting on items that affect the consistency of financialstatements, such as a company’s adoption of new accounting principle or itscorrection of a material misstatement. Investors should benefit from theseimprovements.” — Mark Olson, PCAOB

The new standard and related amendments update the auditor’sresponsibilities to evaluate and report on the consistency of a company’sfinancial statements and align the auditor’s responsibilities with SFAS No.154.

Standard No. 6 also improves the auditor reportingrequirements by clarifying that the auditor’s report should indicate whether anadjustment to previously issued financial statements results from a change inaccounting principle or the correction of a misstatement. If the standard andamendments are approved by the Securities and Exchange Commission, they willbecome effective 60 days after approval.

“Auditing Standard No. 6 will improve the quality of theaudtor’s reporting on items that affect the consistency of financialstatements, such as a company’s adoption of new accounting principle or itscorrection of a material misstatement,” said Mark Olson, PCAOB chairman, in astatement. “Investors should benefit from these improvements.”

]]> http://www.directorship.com/pcaob-adopts-new-auditing-standard/feed/ 0 http://www.directorship.com/pcaob-public-forum-to-weigh-new-auditing-standards/ http://www.directorship.com/pcaob-public-forum-to-weigh-new-auditing-standards/#comments Thu, 01 Jan 1970 00:00:00 +0000 Joseph McCafferty http://www.directorship.com/?p=3268 The Public Company AccountingOversight Board hosts an open meeting tomorrow to consider adopting changes toits auditing standards.

The PCAOB proposed changing itsauditing standards last April after the Financial Accounting Standards Board’s(FASB) issued changes related accoungint standards pursuant to GenerallyAccepted Accounting Principles (GAAP). 

The PCAOB’s proposed standardand related amendments establish requirements for the auditor’s evaluation ofthe consistency of financial statements, in light of the new accountingstandard. It also proposed to remove the hierarchy of generally acceptedaccounting principles from its interim standards in light of the FASB’s proposalto incorporate the hierarchy into the authoritative accounting literature. Thishierarchy currently resides only in the auditing standards.

The meeting will be open to the public and webcast via a link on www.pcaobus.org that will be made availble the day of the meeting.

PCAOB Chief Auditor Thomas Ray,speaking last week, before a meeting of the American Institute of CertifiedPublic Accountants, said he expects audit firms to do more to find potentialfraud on corporate financial statements. “It’s essential that auditors maintainprofessional skepticism and that they follow up on red flags they find,” saidRay, a former partner with KPMG and Grant Thornton. “Auditors have to evaluatethe risk of fraud.”

The Public Company Accounting Oversight Boardissued disciplinary orders yesterday against Deloitte & Touche and former Deloitte partner James Fazio for a audit of Ligand Pharmaceuticals.

The audit firm regulator fined Deloitte $1 million and forced it to undertake improvements to its quality control policies. Fazio was barred from being associated with a public accounting firm for two years, after which he may file a petition to allow him to work in the profession again.

The disciplinary action is the first the PCAOB has undertaken against a Big Four firm and one of its partners.

The enforcement action was related to the 2003 audit of Ligand in which the company underestimated product returns and overstated revenue. The PCAOB alleges that Mr. Fazio “failed to perform appropriate and adequate procedures” relating to Ligand’s revenue recognition practices and also failed to ensure that others performed such procedures.

In July, the SEC approved the risk-based Audit Standard 5 from the Public Company Accounting Oversight Board, which companies hadcomplained was unnecessarily time consuming and inefficient.  According to WebCPA, Atkins says the newstandard to force changes on auditors as they try to comply with section 404 ofSarbanes-Oxley on auditing internal controls at companies.

“If auditing fees do not come down as a result of thesechanges, then something is terribly wrong with the interpretation of AuditStandard 5 and perhaps with the competitive landscape in the auditingprofession itself,” WebCPA quotes Atkins in saying in a speech before theAmerican Chamber of Commerce last week in Japan.  “Auditors need to change their approach inresponse to the new standard.  The PCAOBneeds to inspect with an eye toward ensureing that auditors are applying thenew standard properly.  The SEC, in turn,should keep a close eye on PCAOB and whether Section 404 reforms are working.”