Earlier today, SEC Chairman Mary L. Schapiro announced the appointment of Jeanette M. Franzel to the PCAOB board. Franzel, currently a Managing Director at the U.S. Government Accountability Office (GAO), fills the vacancy created when board member Dan Goelzer's term ended; Goelzer remained on the board pending the naming of his replacement.
Franzel has a wide-ranging background in various aspects of financial reporting and auditing. As noted in the SEC's press release
Ms. Franzel currently leads all aspects of GAO’s financial audit oversight of the U.S. federal government. She heads a team of approximately 250 staff that focuses on financial and performance audits, proper use of federal funds, internal control, financial systems and federal audit and financial management policy. Ms. Franzel is a Certified Public Accountant (CPA), Certified Internal Auditor (CIA), Certified Management Accountant (CMA), and Certified Government Financial Manager (CGFM). She received her bachelor’s degree from the College of St. Teresa and holds an M.B.A. from George Mason University.
In addition to her experience at GAO, Franzel holds additional public policy credentials: according to Franzel's LinkedIn bio as of 2.3.12, she received an Executive Fellow designation from the Harvard Kennedy School of Government, Harvard University. It's also interesting that, as noted in Franzel's Federal NewsRadio bio
SEC's Schapiro praised the incoming (Franzel) and outgoing (Goelzer) PCAOB board members, stating (as noted in today's SEC press release):
Jeanette’s commitment to the public trust and America’s investors is demonstrated by her lifelong public service and her constant dedication to increasing accountability, audit quality and audit standards. She has extensive hands-on experience leading financial audits and deep expertise in audit quality control which will serve the PCAOB well as it continues to execute a rigorous standard-setting, inspections, and enforcement agenda.
I would like to thank Dan Goelzer for nearly a decade of service at the PCAOB and for continuing to serve while the search for a new member of the Board was underway. I wish him the very best in his future endeavors.
SEC Chief Accountant Jim Kroeker added:
We look forward to working with Jeanette on the PCAOB’s important statutory mission of overseeing the auditors of public companies and SEC-registered broker-dealers. Her qualifications as a nationally and internationally recognized expert in auditing standards will benefit the PCAOB as it works to protect the interests of investors and strengthen audit quality.
Upon being named to the PCAOB board, Franzel said:
I am honored to continue serving the public interest in my new role as a member of the PCAOB. I look forward to advancing the agenda to strengthen investor protection through high quality audits of public companies and broker-dealers.
A statement issued by the PCAOB welcoming her to the board said:
Jeanette brings to the PCAOB a distinguished public service career and has long participated in our Standing Advisory Group through GAO's role as an observer. She will significantly contribute to our efforts to carry out the Board’s mission.
PCAOB Chairman Jim Doty added:
Jeanette’s extensive experience in the field of securities regulation and auditing standards will enable her to hit the ground running. I am delighted to have her join the Board.
Action Was Predicted by Hilzenrath
The Washington Post's David Hilzenrath correctly speculated in an article earlier this week, citing unnamed sources, that Franzel was one of the top candidates being considered by the SEC for the PCAOB board position. In his article, "SEC Chairman Faces Bellweather Vote," Hilzenrath speculated the other candidate under consideration was Prof. Joseph Carcello, a member of the PCAOB's Standing Advisory Group. (Hat tip to former SEC Chief Accountant Lynn Turner who circulated the WashPost article to his news listserv last night).
UPDATE: Aguilar's Dissent
Based on an email circulated by Turner today, SEC Commissioner Luis Aguilar formally dissented on the SEC's appointment of Franzel. According to a statement of Commissioner Aguilar (not yet on www.sec.gov at the time of this writing) circulated by Turner, Aguilar said:
My objection to this appointment is based on the fact that the Commission must appoint individuals who have “demonstrated commitment to the interests of investors.” This is not the case here. Although the appointee is an experienced government auditor, and I appreciate her years of service, there is nothing in the evidentiary record that reflects a commitment to the interests of investors, or a history of advocacy for investor rights. I believe the Commission is bound to appoint an individual whose actions, public statements, and reputation demonstrate a clear and steadfast advocacy of the rights and interests of investors.
My two cents (please see the disclaimer that appears on the right side of this blog): It will be interesting to see how the chemistry of the newly configured board (i.e. with Franzel in place of Goelzer) plays out; the challenge for any standard-setting or rule-making body that implictly or explicitly must consider the public interest is in balancing the need for technical expertise and understanding, with a working understanding and commitment to the public policy.