The new chairman and acting chief accountant of the US
Securities and Exchange Commission have received a warm welcome
from the Centre for Audit Quality (CAQ), a non-profit affiliate of
the American Institute of Certified Public Accountants that acts as
a spokesperson for the US profession.
CAQ executive director Cindy Fornelli told The
Accountant Mary Schapiro is an incredible leader.
Fornelli has worked with Schapiro over the past decade – the CAQ
executive spent six years at the SEC as deputy director of the
division of investment management at the same time Schapiro was at
the Financial Industry Regulatory Authority’s predecessor the
National Association of Securities Dealers (NASD).
“I think we are very lucky to have her,” Fornelli said. “She has
a unique set of characteristics or qualities you don’t often see in
leadership in that she is very tough, so she will be tough on
enforcement, but she is also very practical minded – she looks for
“She very much understands that in order to make regulation work
it has to be practical and it has to be implementable. She has got
that unique dual capacity that sometimes you don’t see in a
regulator, which I think is exactly what we need right now.”
Stamping her mark
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A number of comments Schapiro has made since her nomination have
indicated policies that could affect the professional services
industry. The new chair has voiced concern about the rapid pace of
the SEC’s current proposed roadmap to IFRS.
The CAQ supports a single set of international standards, but
Fornelli said she understands Shapiro’s concerns, which mainly
relate to the governance of the International Accounting Standards
“We saw during the fair value debate that it is important to
have a strong international standard-setting body that is free from
influence by politicians and so I think that gave everybody some
pause,” she said.
“I don’t want to be seen as criticising [IASB chair] Sir David
Tweedie, I think that as the head of the IASB he did a great job of
trying to manoeuvre that political situation that he found himself
Another change Schapiro is likely to head will bring more audit
firms under the Public Company Accounting Oversight Board’s (PCAOB)
The Sarbanes-Oxley Act (SOX) directs auditors that audit
broker-dealers must register with the PCAOB. However, for the past
five or six years that registration requirement has been
The PCAOB said earlier this month the exemption would not be
extended, so financial statements of broker-dealers for fiscal
years ending after 31 December 2008 must be certified by a
The Sarbanes-Oxley statute did not give the PCAOB the authority
to inspect broker-dealer auditors nor to enforce against them.
Schapiro has said she supports legislation that would give the
PCAOB this authority.
Fornelli does not know how many firms the new regulations will
affect, but said there are a couple of thousand broker-dealers.
“It is my understanding there will be a number of new firms that
will come under the PCAOB’s jurisdiction for the first time, which
I think is part of why the PCAOB and the SEC have delayed
implementation of this piece of SOX, because of the resource
issue,” she explained.
Fornelli has also worked in the past with the SEC’s new acting
chief accountant, James Kroeker. She said his time with Deloitte
and the Financial Accounting Standards Board gives him great
credentials and experience.
Kroeker led the SEC’s study on fair value accounting (see
SEC study says improve, not suspend, fair value) and Fornelli
said investors should be very pleased with its strong stance in
support of fair value accounting.
Mary Schapiro: career highlights
• 1988-1994 SEC commissioner
• 1994-1996 Federal Commodity Futures Trading
• 1996-2002 NASD president of regulation
• 2002-2006 NASD vice-chairman
Became NASD chief executive
Led NASD’s consolidation with New York Stock Exchange Member
Regulation to form FINRA
Nominated by US President Barack Obama to chair the SEC