Been There, Done That
The new chief accountant of the SEC has the ideal experience for the position. About ten years ago, he served as an SEC fellow in the Office of the Chief Accountant. He later returned to Coopers & Lybrand as a partner in their Denver, Colorado, office, where he had both client and SEC consulting responsibilities. Just prior to taking the chief accountant position, he was the chief financial officer and vice president of a large international semiconductor company.
CPA Journal editors James L. Craig, Jr., and Douglas R. Carmichael met with Lynn E. Turner recently to discuss the progress being made by the Independence Standards Board, now just about a year old, and the September 28th speech of SEC Chair Arthur Levitt. In that speech Levitt raised some major concerns about practices that are threats to the sound and credible financial reporting system, an important component of the U.S. capital markets.
Turner's broad background will not make it easy for either registrants or their auditors to come before his office unprepared. He raises a very fundamental issue relating to auditor independence-the strength of character of the audit partner when dealing with the registrants that may be pushing the envelope.
This interview, in some respects, is a sequel to an interview last year with then chief accountant Michael Sutton. The Sutton interview occurred around the time the Independence Standards Board was formed. Sutton saw the Independence Standards Board as a self-regulatory answer to the SEC's concerns about auditor independence. One of those concerns was the evolution of the large CPA firms from primarily auditing firms to multifaceted personal service organizations, where auditing might become less and less important. The expressed fear was that the auditing aspect of firms might not receive the necessary resources and attention to remain as the effective tool for financial statement reliability that the capital markets are dependent upon.
The CPA Journa: Why Lynn Turner as Chief Accountant of the SEC? You were a bit of a dark horse of a candidate, based upon the various names that appeared in the financial press.
Lynn E Turner: The answer to that question would have to come from Chairman Levitt. I can only point to my background including prior experience at the SEC as an accounting fellow. Another quality I have to offer, which perhaps others did not, is experience as both an auditor and the chief financial officer of an SEC reporting company.
And I view this as a wonderful opportunity to give something back to the profession and to the commission. My earlier time here at the commission was extremely beneficial to me. I had the chance to meet and know outstanding professionals and businesspeople. I felt the time was right for me to make a contribution to a regulatory system that has made our capital markets the best in the world.
CPAJ. Have there been any surprises? Tur The biggest surprise is the increase in the number and complexity of issues the Office of the Chief Accountant is called upon to deal with. Two that immediately come to mind are the liaison with the Independence Standards Board and involvement with international accounting standards. It is my office that will help the Commissioners evaluate whether the core of international accounting standards will be acceptable for filings in the U.S. And the securities markets have never been hotter and more expansive. But our head count in my office is the same as back then. The job market for CPAs and others with securities markets experience is very tight, and it is difficult for us to attract the caliber of people we need to help with the workload. We offer no stock options, and we have to deal with a government pay scale. Managing the demands on our limited resources is a major challenge, and the time to do that effectively is my biggest surprise.
Prior to assuming the position I met with the CEOs of the major firms, their national offices, the FASB, the Public Oversight Board, and the SECPS. …