SEC Chief Quit As His Own Accounting Errors Were Exposed
SEC chairman William Donaldson resigned his post only days after two highly embarassing scandals were revealed at the agency that enforces the nation's accounting rules.
The Government Accountability Office conducted an audit of the agency and found three material weaknesses in its internal controls. The weaknesses related to its recording of fines and restitution via settlements with companies, its preparation of financial statements and the security of its data. The SEC, under Donaldson's watch, "did not maintain effective internal control over financial reporting as of Sept. 30, 2004." Thus the enforcer of Sarbanes-Oxley and overseer of all corporate financial statements could not even oversee itself.
The other revelation was a $48 million cost overrun resulting from misjudged construction and security expenses at its new Washington headquarters and its New York and Boston offices. The SEC blamed the budget shortfall on an "internal budgetary process control problem." Over the past decade, the SEC’s budget has tripled to $913 million.
Comments (4)
"Over the past decade, the SEC’s budget has tripled to $913 million."
Will the people responsible for the continuing existence of the SEC please also resign?
Published: June 4, 2005 2:45 AM
I have searched and read several stories in the major news media on-line regarding Donaldson's resignation, none of which indicate any correlation between the latest audit of the SEC and his decision to step down. He must be headed for some other high political office. Look out.
Published: June 4, 2005 1:23 PM
Dewaine, you are correct that no major news stories connected the resignation to the SEC audit. I would call the timing very "coincidental." Donaldson was essentially forced out. Bush had been unhappy with him for some time since he frequently voted with the Commission's two democrats vs the other two Republicans. In a parting shot, Donaldson commented that his greatest regret was not blocking Bush's re-appointment of deregulation-oriented Paul Atkins to the commission.
Donaldson will not be appointed to any office in the current administration.
Published: June 4, 2005 1:53 PM
Yes, he is also 74 years old or so, and wants to retire. I would want to retire, too, but probably won't by the time I'm that age..
Published: June 5, 2005 12:35 AM