The man Barack Obama has picked to head the Economic Recovery Advisory Board is a former trustee of the International Accounting Standards Board (IASB) who was brought in to try and reform Arthur Andersen after the Enron scandal. Paul Volcker, 81, achieved prominence as chairman of the Federal Reserve under Jimmy Carter, but actually has a long and illustrious career as a reforming accountant.
Economists who believe the West currently faces a stark choice between recession and inflation will be interested to know that while at the Fed in the 1970s Volcker confronted a similar problem. His ramping of interest rates kept inflation down but precipitated the recession of the early eighties. However, despite his banking pedigree, Volcker’s CV reveals a man just as interested in accountancy as in economics.
Volcker was chairman on the oversight board that founded the IASB, and then served the board as a trustee for two years. A troubled Arthur Andersen hired him as a “White Knight” when the Enron scandal broke, although the firm collapsed too quickly for him to achieve much. At one point he offered to eject the firm’s existing management and run the accounting department himself.
He later argued the Arthur Andersen story was powerful evidence of why America needed a global accountancy framework.
"All this scandal has been a big help in one sense,” he said. “It has challenged the traditional American view that if you want international standards, use our standards, because we've got the best and the brightest."
He is also a believer in empowered non-executives and elected audit committees, to whom he thinks chief financial officers and finance directors should report. It’s widely expected that his presence in the ongoing fair value debate will be keenly felt.
