Meet the Auditor – Don Nicolaisen

Don Nicolaisen has no patience for asses…

SEC Auditor, Fannie Critic Resigning

The chief accountant of the Securities and Exchange Commission said yesterday he will step down after two years of service that included cracking down on financial manipulation and fielding business complaints about costly new regulations.

Donald T. Nicolaisen, 61, came to national prominence last year after he ordered Fannie Mae to revamp its accounting practices — a strong rebuke that caused the District-based mortgage finance company to announce it would restate previously reported earnings by $10.8 billion…The Wisconsin-born accountant, who said he would return to private practice, spent nearly four decades at PricewaterhouseCoopers LLP, handling audits for such clients as J.P. Morgan Chase & Co. and Prudential Financial Inc. He joined the agency in August 2003, at the request of then-Chairman William H. Donaldson…

Will he kick some tail in his new role? In May, the Treasury has asked Arthur Levitt, former SEC chairman, and Donald Nicolaisen, former SEC chief accountant, to serve as co-chairs of a non-partisan committee to address auditing industry concentration, and to consider options available to strengthen the industry’s financial soundness and its ability to attract and retain qualified personnel. The intention is that through this public forum, investors, advocates, and companies can present a wide range of views, engage in informed debate and provide recommendations.

He usually says the right thing… “I recognise the office of chief accountant has tremendous authority, and with that goes tremendous responsibility. The number one thing that I have focused on is: ‘Is the investor protected?'”

And he and I agree on this point – …”Mr Nicolaisen insists on a “trade-off” to any reform of auditors’ liability. He says accounting firms must publish annual accounts and provide information about partners’ compensation. Now, they only give revenue figures. He says the firms should embark on corporate governance changes, and have boards that, like public companies, have a majority of independent directors.”

That was some pretty bold stuff for a 40 year veteran of PwC.

But can he do something now that he wasn’t able to do while Chief Accountant at the SEC – While Mr Nicolaisen made big strides on the implementation of the Sarbanes-Oxley legislation, he made less progress with his goal of reducing complexity in US financial reporting.